Itr/98/1995 Of Commr Of Income Tax,Jabalpur v. M/S Krishna Oil Extection

NAFRHIGH COURT OF CHHATTISGARH, BILASPURITR No. 98 of 1995Commissioner of Income Tax, Jabalpur---- Petitioner VersusM/s Krishna Oil Extraction Ltd., Raipur---- RespondentITR No. 64 of 1996Commissioner of Income Tax, Jabalpur---- Petitioner VersusM/s Krishna Oil Extraction Ltd., Raipur---- RespondentITR No. 5 of 1996Krishna Oil Extraction Ltd., Raipur ---- Petitioner VersusCommissioner of Income Tax, Jabalpur---- Respondent________________________________________________________________For Petitioner/Revenue: Shri Amit Chaudhary, AdvocateFor Respondent/Assessee : Shri Om Kukreja, Advocate.Hon'ble Shri P. R. Ramachandra Menon, Chief JusticeHon'ble Shri Parth Prateem Sahu, JudgeOrder on Board P. R. Ramachandra Menon, Chief Justice 30.08.2019 1.These matters are pending consideration before this Court for more thantwo decades, on reference made by the Income Tax Appellate Tribunal,two decades, on reference made by the Income Tax Appellate Tribunal, pursuant to the applications preferred by both the Revenue and also bythe Assessee in terms of Section 256(1) of the Income Tax Act, 1961. 2.ITR No.98 of 1995 and ITR No.64 of 1996 are based on the referenceapplications preferred by the Revenue; whereas the other one i.e. ITRNo.5 of 1996 is at the instance of the Assessee.applications preferred by the Revenue; whereas the other one i.e. ITRNo.5 of 1996 is at the instance of the Assessee. 3.The Assessee, who is a Private Limited Company registered under therelevant provisions of the Companies Act, was deriving income from themanufacture and sale of oil who filed the return debiting the 'disputedamount' to its current year's accounts in respect of the Sales Tax and EntryTax, which in fact was the liability for the earlier years. The AssessingOfficer, holding that, there was no dispute with regard to the liability whichhad occurred in the past, for the reasons stated, disallowed the same andadded it for the purpose of computation of the total income and passedorder fixing the tax liability; which was upheld by the Appellate Authority.But when the proceedings were taken up before the Tribunal, the stand ofthe Assessee was upheld and the appeal was decided accordingly, thoughrelief was declined on some heads as specified therein. This made theRevenue as well as the Assessee to prefer separate applications underSection 256(1) of the Income Tax Act, 1961 seeking for reference, pointingout the question of law involved, which stands referred to be answered bythis Court.relevant provisions of the Companies Act, was deriving income from themanufacture and sale of oil who filed the return debiting the 'disputedamount' to its current year's accounts in respect of the Sales Tax and EntryTax, which in fact was the liability for the earlier years. The AssessingOfficer, holding that, there was no dispute with regard to the liability whichhad occurred in the past, for the reasons stated, disallowed the same andadded it for the purpose of computation of the total income and passedorder fixing the tax liability; which was upheld by the Appellate Authority.But when the proceedings were taken up before the Tribunal, the stand ofthe Assessee was upheld and the appeal was decided accordingly, thoughrelief was declined on some heads as specified therein. This made theRevenue as well as the Assessee to prefer separate applications underSection 256(1) of the Income Tax Act, 1961 seeking for reference, pointingout the question of law involved, which stands referred to be answered bythis Court. 4.The question of law framed by the Department in ITR No.98 of 1995 is asfollows :follows : “Whether on the facts and in the circumstances of thecase, the Tribunal was justified in law in holding thatcase, the Tribunal was justified in law in holding that 4.The question of law framed by the Department in ITR No.98 of 1995 is asfollows :follows : “Whether on the facts and in the circumstances of thecase, the Tribunal was justified in law in holding thatcase, the Tribunal was justified in law in holding that the prior period expenditure on account of sales-taxand Entry-tax can be said to be an expenditure laid outor expended for the purposes of the assesse'sbusiness for the period relevant for the asstt. Year1990-91, and is an allowable deduction under section37 of the Income Tax Act, 1961 ?” Almost similar question of law was framed in the other case i.e. ITR No.64 of1996, at the instance of the Revenue, which is extracted below : “Whether on the facts and in the circumstances of thecase the Tribunal was justified in law in holding thatthe prior period expenditure on account of Sales taxand entry tax can be said to be an expenditure laid outof expended for the purpose of assessee's businessfor the period relevant to A.Yr. 90-91 is an allowablededuction while computing book profit u/s 115J of theIncome-tax Act, 1961 ?” After arriving at a finding as to the involvement of question of law, which requiredto be answered, the Tribunal allowed the above applications and refereedthe questions framed by the Department as extracted above, in turn,leading to the above ITR No.98 of 1995 and ITR No.64 of 1996. 5.Coming to the application preferred by the Assessee under Section 256(1)of the Income Tax Act, 1961, the questions framed by the Assessee werein the following terms : “1. Whether on the facts and in the circumstances ofthe case the Tribunal was right in law in holding thatthe loss as it appears in 205(1) first proviso clause (b)of the Companies Act 1956 read with section 115J ofthe Income Tax Act 1961, means excludingdepreciation ? 2. Whether on the facts and in the circumstances ofthe case, the interpretation of word 'loss' sought to beput on section 115J of the Income Tax Act by theTribunal is correct in Law ? 3. Whether on the facts and in the circumstances ofthe case the Tribunal was right in law in placingreliance on judgement of V.V. Trans Investment (P)Ltd. -vs- C.I.T. & others (1994) 207 ITR 508 ? 4. Whether on the facts and in the circumstances ofthe case the judgement of Andhra Pradesh High Courtin case of V.V. Trans Investment (P) Ltd. -vs- C.I.T. &others (1994) 207 ITR 508 was a binding precedencefor Income Tax Appellate Tribunal, Nagpur ? 5. Whether on the facts and in the circumstances ofthe case, the Tribunal was right in law in holding thatthe assessee was under an obligation to pay advanceTax on book profit determined u/s 115J ?” The Tribunal observed that the questions No.1 to 4 framed by the Assessee hadalready been referred in the Assessee's own case as per order dated20.07.1995 in R.A. No.87/Nag/95 (as referred to ITR No.98 of 1995). Withregard to the remaining question i.e. question No.5 framed by theAssessee, the Tribunal was of the opinion that, it also required reference,but on a 'modified form' and accordingly, the said question was re-framedby the Tribunal as follows : “Whether on the facts and in the circumstances of thecase the Tribunal was right in holding that theAssessee was liable to pay interest under Sections234B and 234C of the Income Tax Act, 1961 ?” This question was referred accordingly; which is the subject matter ofconsideration in ITR No.5 of 1996. The Tribunal observed that the questions No.1 to 4 framed by the Assessee hadalready been referred in the Assessee's own case as per order dated20.07.1995 in R.A. No.87/Nag/95 (as referred to ITR No.98 of 1995). Withregard to the remaining question i.e. question No.5 framed by theAssessee, the Tribunal was of the opinion that, it also required reference,but on a 'modified form' and accordingly, the said question was re-framedby the Tribunal as follows : “Whether on the facts and in the circumstances of thecase the Tribunal was right in holding that theAssessee was liable to pay interest under Sections234B and 234C of the Income Tax Act, 1961 ?” This question was referred accordingly; which is the subject matter ofconsideration in ITR No.5 of 1996. 6.When the above matters came up for consideration earlier on 18.08.2010,it was brought to the notice of this Court that a similar question in M/sDynamic Orthopedics Pvt. Ltd. v. Commissioner of Income Tax,Cochin, Kerala was already referred by the Apex Court to Larger Benchvide order dated 16.02.2010 and in the said circumstances, the abovecases were ordered to be listed after ascertaining the position of the casewhich was pending consideration before the Larger Bench.it was brought to the notice of this Court that a similar question in M/sDynamic Orthopedics Pvt. Ltd. v. Commissioner of Income Tax,Cochin, Kerala was already referred by the Apex Court to Larger Benchvide order dated 16.02.2010 and in the said circumstances, the abovecases were ordered to be listed after ascertaining the position of the casewhich was pending consideration before the Larger Bench. 7.Later, on 29.09.2011, it was confirmed that the matter was still pendingbefore the Larger Bench of the Apex Court as Civil Appeal No.8419 of2003 (M/s Dynamic Orthopedics Pvt. Ltd. v. Commissioner of IncomeTax, Cochin, Kerala); when the above cases were adjourned to be listedafter disposal of the civil appeal; reasonably presuming that the issuemight get finalized in a short while. The matters have been listed today, toascertain the position as on date. before the Larger Bench of the Apex Court as Civil Appeal No.8419 of2003 (M/s Dynamic Orthopedics Pvt. Ltd. v. Commissioner of IncomeTax, Cochin, Kerala); when the above cases were adjourned to be listedafter disposal of the civil appeal; reasonably presuming that the issuemight get finalized in a short while. The matters have been listed today, toascertain the position as on date. 8.Shri Om Kukreja, learned counsel appearing for the Assessee submits thatthe similar question/issue pending consideration before the Larger Benchof the Apex Court is still to be finalized. The matters were listed before theApex Court along with other connected appeals on 11.07.2019, on whichday, they came to be adjourned to 18.07.2019, but are yet to be listedfurther for final hearing and disposal.the similar question/issue pending consideration before the Larger Benchof the Apex Court is still to be finalized. The matters were listed before theApex Court along with other connected appeals on 11.07.2019, on whichday, they came to be adjourned to 18.07.2019, but are yet to be listedfurther for final hearing and disposal. 9.In the above circumstances, we are of the view that the picture would beclear and the legal question will stand answered, once final verdict isclear and the legal question will stand answered, once final verdict is Yogesh 9.In the above circumstances, we are of the view that the picture would beclear and the legal question will stand answered, once final verdict isclear and the legal question will stand answered, once final verdict is Yogesh passed by the Larger Bench of the Apex Court in the matter as mentionedabove. The law to be declared by the Apex Court will naturally govern theissues involved in these cases as well and as such, we find it appropriateto close these reference matters, recording the said position. If for anyreason, any question/point remains to be unanswered, requiringinterference of this Court to have it answered separately, in the light of lawdeclared by the Apex Court, we make it clear that either the Revenue orthe Assessee, will stand permitted to file an interlocutory application beforethis Court to get these cases re-opened, to be dealt with in appropriateterms. 10.Subject to the above, these reference applications stand closed. TheRegistry is directed to communicate the outcome to the Tribunal, inaccordance with the relevant provisions of law, to be part of the records ofthe Tribunal. Sd/- Sd/- (P.R. Ramachandra Menon) (Parth Prateem Sahu) Chief Justice Judge