Peria Karamalai Tea and Produce Ltd. vs Commissioner of Income Tax

K.K. Usha, J.—Income Tax Reference Nos. 141, 142 and 143 of 1977 arise out of I. T. A. Nos. 2, 3 and 4/Coch of 1975-76 before the Income Tax Appellate Tribunal, Cochin Bench, at the instance of the assessee. The relevant assessment years are 1965-66, 1966-67 and 1967-68. Common question referred for the opinion of this court is as follows (see Peria Karamalai Tea and Produce Co. Ltd. Vs. Commissioner of Income Tax, ) :

"Whether Circular No. 53 (F. No. 7/2/68-TPL, dated January 11, 1971, issued by the Central Board of Direct Taxes and in which circular the extent of its application is not specified is applicable to reassessments in respect of the assessment years 1965-66, 1966-67 and 1967-68, even though such reassessments were made only after the aforesaid date of January 11, 1971 ?"

The Tribunal refused to refer the second question sought to be referred by the assessee. Therefore, the assessee filed compelling reference O. P. Nos. 4241, 4277 and 4240 of 1977 before this court. Pursuant to the direction issued by this court, the second question was also referred by the Tribunal. This is the question that is arising in I. T. R. No. 130 of 1979. The question reads as follows :

"Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the excess development rebate reserve was not to be included in the computation of the capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?"

A Bench of this court, by a common judgment dated October 25, 1979 ( Peria Karamalai Tea and Produce Co. Ltd. Vs. Commissioner of Income Tax, ), answered the common question referred in I. T. R. Nos. 141 to 143 of 1977, in favour of the Revenue and against the assessee. Subsequently, by a later judgment dated January 1, 1980 I. T. R. No. 130 of 1979 was also disposed of. It was observed therein that the question that arises in I. T. R. No. 130 of 1979 is the same question which was answered by this court in ITR Nos. 141 to 143 of 1977. Thus, question No. 2 was also answered by the Bench in favour of the Revenue and against the assessee. Later, C. M. P. No. 1521 of 1980 was filed by the assessee to rectify an error apparent on the face of the record in the judgment in I. T. R. No. 130 of 1979. It was contended that the question that was answered in I. T. R. Nos. 141 to 143 of 1977 was question No. 1 which was different from question No. 2 which was referred in I. T. R. No. 130 of 1979. Even though this court was convinced that there was a mistake in the judgment, the petition was dismissed for the reason that once the reference was answered, this court has become functus officio and this court cannot interfere with that order, even if it is vitiated by a mistake. It was then observed that it is open to the petitioner to file an appeal and that was the only remedy.

Civil Appeals Nos. 1121, 1316 and 1317 of 1980, before the Supreme Court were from the judgment in I. T. R. Nos. 143, 141 and 142 of 1977. Civil Appeal No. 8241 of 1983 arose out of the judgment in I. T. R. No. 130 of 1979. The above civil appeals were allowed by the Supreme Court under a common order. After referring to the contentions raised by the appellants on both the questions, the Supreme Court held as follows :

"In view of the fact that the High Court has not considered question No. 2 on the merits we think it appropriate that these matters should go back for reconsideration by the High Court. Question No. 2 which we are remitting to the High Court for reconsideration reads as follows :

''Whether, on the facts and circumstances of the case the Income Tax Appellate Tribunal was right in holding that the excess development rebate reserve was not to be included in the computation of the capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?''

The appeals are accordingly allowed in the above terms. There shall be no order as to costs.

We make it clear that we express no opinion on the above question or on the submissions made by Mr. Iyer. It shall be open to both the parties to urge such contentions as are open to them according to law."

The above would make it clear that the only question that is remitted for consideration of this court is question No. 2. Our attention was brought to two Bench decisions of this court in I. T. R. Nos. 110 and 131 of 1971, dated June 6, 1973, and I. T. R. Nos. 278 and 279 of 1980, dated February 11, 1986, where this court has answered a similar question in favour of the Revenue and against the assessee. Learned counsel for the assessee submitted that in the light of the decision of the Supreme Court in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, , the above mentioned two decisions are liable to be reconsidered. Learned counsel took us through the decision of the Supreme Court in detail. We are of the view that the issue which has arisen in the present cases has not directly arisen in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, . Under these circumstances, we do not find any reason to deviate from the view taken in the above mentioned two Bench decisions of this court. The only question that is left open for our consideration as per order of the Supreme Court is the one arising in I. T. R. No. 130 of 1979. We answer the question in the affirmative, in favour of the Revenue and against the assessee. The common question that arises in I. T. R. Nos. 141 to 143 of 1977 is not left open by the Supreme Court for our consideration. We therefore follow the decision of this court dated October 25, 1979, in the above Income Tax references and answer the question in the affirmative, that is, in favour of the Revenue and against the assessee.

A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.