C.I.T.-II vs Emtici Engineering Ltd.

K.S. Jhaveri, J.—These Tax Appeals involve common questions on law and therefore, they are decided by this common judgment. Since the facts are almost similar, Tax Appeal No. 70/2002 is taken as the lead matter.

Briefly stated, the facts are that the assessee-Company is a selling agent for Elecon Engineering Ltd., Eimco Elecon Engineering Ltd., Power Build Ltd., etc. and the main source of its income is commission received from them. Besides, the assessee also carries out fabrication works for Projects. The assessee had, in its return of income, claimed to be a company in which public are substantially interest. However, the share holding pattern of the assessee had not changed and it remained the same as was in the previous year.

While admitting the appeal on 11.02.2002, the following substantial questions of law were formulated for our consideration;

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has substantially erred in law and on facts in confirming the order passed by the C.I.T. (Appeals) deleting interest of Rs. 2,63,460/- attributable to investment in shares?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has substantially erred in law in confirming the order of the C.I.T. (Appeals) directing the Assessing Officer to recompute the income from the factory building known as Trupti Casting as income from other sources after allowing depreciation as admissible deduction?"

We have heard learned counsel for both the sides. Insofar as question No. 1 is concerned, the same is concluded by the decision of this Court passed in Tax Appeal No. 255/2000 decided on 17.11.2014. For ready reference, the judgment and order passed in the aforesaid appeal is reproduced hereunder;

"1. This Tax Appeal u/s. 260A of the Income-tax Act, 1961 is filed against the judgment and order dated 17.11.1999 passed by the Income Tax Appellate Tribunal in ITA No. 1129/Ahd/1994 whereby, the appeal was dismissed.

Briefly stated, the facts are that the assessee-firm filed its return of income on 31.12.1990 declaring income at Rs. 50,26,263/-. The return of income was processed by the Assessing Officer and an order u/s. 143(3) of the Act dated 29.03.1993 came to be passed against the assessee. Against the said order, appeal was filed before the CIT(A). The said appeal was partly allowed vide order dated 12.01.1994. Being aggrieved by the same, appeals were preferred before the Income Tax Appellate Tribunal. The Appellate Tribunal, vide judgment and order dated 17.11.1999, dismissed both the appeals. Hence, this Tax Appeal at the instance of the Revenue.

We have heard learned counsel for both the sides and have perused the record of the case.

In para-15 of the judgment, the Appellate Tribunal observed as under;

"15. ITA No. 1129/Ahd/94 : The first ground of appeal is regarding notional interest attributable to investment in shares. The A.O. decided the issue against the assessee following earlier years'' or in similar circumstances. The first appellate authority, following earlier years'' orders, allowed relief to the assessee."

It is evident from the order of the Appellate Tribunal that the CIT(A) decided the issue in favour of the assessee by relying upon the orders passed in the earlier years, which was concurred by the Appellate Tribunal.

It is required to be noted that for the A.Y. 1984-85, the Revenue in the case of the same assessee had filed Reference Application u/s. 256(2) before the Appellate Tribunal seeking reference on the following question of law;

"Whether, the Appellate Tribunal is right in law and on facts in holding that the amount of Rs. 4.50 Lacs contributed by the assessee to the Gujarat Cricket Association cannot be treated as of capital nature and directing the Assessing Officer to allow the same as revenue expenditure?"

However, the Appellate Tribunal rejected the aforesaid Reference Application, vide order dated 11.09.1998. It is pertinent to note that the issue, which is subject matter of present appeal, was never carried in appeal before this Court. The Appellate Tribunal followed the same decision in this matter also.

Considering the aforesaid factual aspects, the Appellate Tribunal was justified in granting benefit of the earlier years'' orders to the assessee, which are final. In view of the same, we find no illegality with the judgment rendered by the Appellate Tribunal and accordingly, concur with the view taken by the Appellant Tribunal. The appeal, therefore, stands dismissed."

Insofar as question No. 2 is concerned, the issue was never carried in appeal before this Court and therefore, the earlier years'' orders, on which the Appellate Tribunal placed reliance, had become final.

In view of the above, both the questions of law are answered in favour of the assessee and against the Revenue. We are not giving elaborate reasons since the issue is already concluded, as aforesaid. Accordingly, all the three appeals stand rejected.