Pr. Commissioner Of Income Tax -7 v. Power Links Transmission Ltd

$~47 & 49 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 87/2022 PR. COMMISSIONER OF INCOME TAX -7 ..... AppellantThrough:Mr.Puneet Rai, senior standingcounsel. versus POWER LINKS TRANSMISSION LTD Through:None ..... Respondent +ITA 90/2022 PR. COMMISSIONER OF INCOME TAX -7 ..... Appellant Through:Mr.Puneet Rai, senior standingcounsel. versus POWER LINKS TRANSMISSION LTD. Through:None ..... Respondent Date of Decision: 18[th]April, 2022 % CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMA J U D G M E N T MANMOHAN, J (Oral): 1.Present appeals have been filed challenging the orders dated 02[nd]March, 2021 passed in ITA 5965/DEL/2017 and ITA 5966/DEL/2017 forthe Assessment Years 2013-14 and 2014-15 respectively. ITA Nos.87/2022 & 90/2022 Page 1 of 4 NEUTRAL CITATION NO: 2022/DHC/001395 2.Learned counsel for the Appellant-Revenue states that the ITAT haserred in deleting the addition of Rs.5,64,73,054/- made by the AssessingOfficer under Section 36(1)(iii) of the Income Tax Act, 1961 (hereinafterreferred to as the ‘Act’) on account of disallowance of interest expenditure.He states that the ITAT has failed to appreciate that the assessing companyhad used the borrowed funds for non-business purposes. He states that theCompany earned interest income at an average rate of 7.6% while on loansthe assessee company paid interest at an average rate of 12.1%. Hecontends that liability on account of interest could have been reduced by4.5%, in case the amount kept as FDRs had been utilised in making earlyrepayment of the loans. He emphasises that the assessee company is neitherinto the business of investment nor in securities. Therefore, according tohim, the Assessing Officer had correctly invoked Section 36(1)(iii) of theAct and disallowed the proportionate interest expenditure which was notutilized for business purposes. 3.Learned counsel for the Appellant further states that the ITAT hasdismissed the appeals on basis of the Assessee’s own case for theAssessment Years 2007-08, 2010-11 & 2012-13. He submits that it is asettled principle that in matters pertaining to tax there is no issue of resjudicata because each year’s assessment is final only for that particularfinancial/assessment year and does not govern later years. 4.A perusal of the paper book reveals that the issue in dispute in boththe present appeals is covered by the decisions passed byco-ordinateBenches of the ITAT in ITA No.1809/Del/2016 for the Assessment Year2012-13 dated 8[th]February, 2019 and in ITA No.3869 & 3870/Del/2014dated 21[st]December, 2018 for the Assessment Years 2007-08 and 2010-11 ITA Nos.87/2022 & 90/2022 Page 2 of 4 NEUTRAL CITATION NO: 2022/DHC/001395 respectively. In fact, the Tribunal while dealing with previous assessmentyears in the assessee’s own case has held that due to contractual restrictionsand liquidation damages/pre-payment charges, it was neither prudent forthe assessee to divert any part of borrowed funds for non-business purposesnor was it prudent to make pre-payment of loan even if the assessee had itsown interest free funds. 5.It is an admitted position that the facts and circumstances in thepresent appeals (for the Assessment Years 2013-14 and 2014-15) aresimilar to the facts and circumstances for the Assessment Years 2007-08,2010-11 and 2012-13 to which the aforesaid orders dated 21[st]December,2018 and 08[th]February, 2019 pertain.It is pertinent to mention that noappeal has been filed under Section 260A of the Act till date challengingthe orders dated 21[st]December, 2018 and 08[th]February, 2019. 5.It is an admitted position that the facts and circumstances in thepresent appeals (for the Assessment Years 2013-14 and 2014-15) aresimilar to the facts and circumstances for the Assessment Years 2007-08,2010-11 and 2012-13 to which the aforesaid orders dated 21[st]December,2018 and 08[th]February, 2019 pertain.It is pertinent to mention that noappeal has been filed under Section 260A of the Act till date challengingthe orders dated 21[st]December, 2018 and 08[th]February, 2019. 6.Undoubtedly, the principles of res-judicata and estoppel are notapplicable in taxation matters. However, it has been held that a departurefrom a finding during the past years would result in a contradictory finding.(See: Commissioner of Income Tax vs. Sridev Enterprises (1991) 192 ITR165). In fact, in Commissioner of Income Tax vs Excel Industries Ltd(2014) 13 SCC 457, the Court had observed that it was not appropriate toallow reconsideration of an issue for a subsequent assessment year if thesame “fundamental aspect” permeates in different assessment years. 7.The Supreme Court in Principal Commissioner of Income Tax, NewDelhi vs. Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC) hasemphasized the importance of promoting the ‘principle of consistency andcertainty’ in tax matters. The Apex Court has held “There is a value whichthe court must abide by in promoting the interest of certainty in tax ITA Nos.87/2022 & 90/2022Page 3 of 4 NEUTRAL CITATION NO: 2022/DHC/001395 litigation. The view which has been taken by this Court in relation to therespondent for AY 2011-12 must, in our view be adopted in respect of thepresent appeal which relates to AY 2012-13. Not doing so will only resultin uncertainty and displacement of settled expectations.There is asignificant value which must attach to observing the requirement ofconsistency and certainty. Individual affairs are conducted and businessdecisions are made in the expectation of consistency, uniformity andcertainty.To detract from those principles is neither expedient nordesirable.” 8.Consequently, this Court is of the view that all similar matters shouldreceive similar treatment except where factual differences require adifferent treatment so that there is assurance of consistency, uniformity,predictability and certainty of judicial approach.Applying the saidprinciples, this Court is of the opinion that no question of law arises forconsideration in the present appeals and the same are dismissed. MANMOHAN, J APRIL 18, 2022KA DINESH KUMAR SHARMA, J ITA Nos.87/2022 & 90/2022 Page 4 of 4