Commissioner of Income Tax vs Doris Educational and Commercial Services P. Ltd.

The decision rendered in this appeal shall govern the disposal of other connected appeals being I. T. A. Nos. 96, 97, 99, 100 and 101 of 2005 because all these appeals involve common substantial question of law and secondly, these appeals are filed by the Revenue against one Assessee.

This is an appeal filed by the Revenue (Commissioner of income tax) u/s 260A of the income tax Act, 1961, against an order dated January 31, 2005 passed by income tax Appellate Tribunal in I. T. A. No. 284/Ind of 2004 (assessment year 1994-95). The appeal was admitted for final hearing on the following substantial question of law

Whether, on the facts and in the circumstances of the case and in law, the income tax Appellate Tribunal was justified in treating the lease rent received from school building along with playground etc., as business income ?

At the outset, learned Counsel for the parties agreed that the appeal does involve two more substantial questions of law, which arise out of the impugned order and hence, with the consent of learned Counsel for the parties, we frame two additional questions of law by taking recourse to our powers available u/s 260A(4) ibid.

When admittedly the impugned finding is recorded by the Tribunal without taking into consideration the law laid down by the Supreme Court reported in Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, then whether such finding is liable to be set aside being rendered in ignorance of law laid down by the Supreme Court ?

If answer to question No. 2 is in the affirmative, whether a case for remand is made out for remanding the case to the Tribunal for deciding the appeal afresh on the merits ?

Heard Mr. R.L. Jain, learned senior counsel with Ms. Veena Mandlik, learned Counsel for the Appellant and Mr. Vijayesh Atre, learned Counsel for the Respondent.

Having heard the learned Counsel for the parties and on a perusal of the record of the case and lastly as conceded by learned Counsel for the parties, we have formed an opinion to remand this appeal along with other connected appeals to the Tribunal (ITAT) for their decision afresh on the merits.

Since, we have formed an opinion to remand the cases to the Tribunal for their fresh decision on the merits and hence, it is not necessary for this Court to narrate the facts in detail nor to record any categorical finding on the merits at this stage in these appeals. It will be now for the Tribunal to record a categorical finding on the merits after remand.

The need to remand the case to the Tribunal has occasioned because the Tribunal has failed to examine the issue involved in the appeal in the light of the law laid down by the Supreme Court in the case of Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, . In other words, the Tribunal did not notice the law laid down in the case of Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, though applicable to the facts of the case and hence, committed an error of law in deciding the appeal.

It is a settled principle of law that law laid down by the Supreme Court is binding on all courts/Tribunal/authority in our country by virtue of Article 141 of the Constitution of India. Indeed, when the issue is settled by the decision of the Supreme Court or when any test is laid down as to how and in what manner a particular issue is required to be decided by courts then it is the foremost duty of courts/Tribunal to decide the issue in the light of test laid down by the Supreme Court. Deciding an issue in ignorance of the test vitiates the decision.

It is not in dispute and rather both learned Counsel for the parties conceded that the law laid down by the Supreme Court in the case of Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, has a bearing over the issue involved in the case and hence, in the first instance the issue needs to be decided by the Tribunal in the light of the test laid down by the Supreme Court in the said decision and then by this Court (if occasion arises). Indeed, it is in this case Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, their Lordships of the Supreme Court in paragraph 18 laid down the four propositions as to how and in what circumstances, an income earned by the Assessee by whatever name called whether lease amount, rents, licence fee, received from leasing or letting out of assets can be held as business income.

In our opinion, since, their Lordships have held this question to be a mixed question of law and fact and hence, this Court while hearing the appeal cannot decide the question for the first time. The Tribunal being the last court of appeal on facts has to undertake this task on facts involved in the case. It is for this reason, the remand is called for to the Tribunal.

Accordingly and in view of the foregoing discussion, we answer question Nos. 2 and 3 in favour of the Appellant, i.e., Revenue. As a consequence, it is not necessary to answer question No. 1 because the case has to go back to the Tribunal for deciding question No. 1 afresh on its merits keeping in view the law laid down by the Supreme Court in the case of Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, and any other decision of the Supreme Court holding the field on the subject in question subsequent to Universal Plast Limited Etc. Vs. Commissioner of Income Tax, Calcutta, .

As a consequence, the appeal succeeds and is allowed in part. The impugned order is set aside and the case is remanded to the Tribunal for fresh decision in the light of what is observed supra.

No costs. C. C. as per rules.