Rajasthan High Court - Jaipur
C I T vs Raj State Mines & Minearal Ltd on 14 December, 2016
Bench: K.S. Jhaveri, Dinesh Mehta
1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR.
DB INCOME TAX APPEAL NO.131/2004 Commissioner of Income Tax, Jaipur-II, Jaipur.
Versus Rajasthan State Mines and Mineral Ltd. 24, Uniyara Garden, Jaipur.
DATE OF ORDER ::: 14.12.2016.
HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE DINESH MEHTA Mr. Anuroop Singhi, for the appellant.
1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the assessee and confirmed the order of the CIT(A).
2. This Court while admitting the appeal on 05.10.2004, framed the following substantial question of law:
"Whether in the facts and circumstances of the case and in law the ITAT was justified in allowing the sum of Rs.6,61,85,333.00/- as business expenditure."
3. Counsel for the appellant has contended that the order passed by the AO is just and proper and in that view of the matter the order of the CIT (Appeal) as well of the Tribunal are required to be reversed.
4. However, identical issue/contrary has been decided by this Court in DB Income Tax Reference No.77/1995, in case of Commissioner of Income Tax, Jaipur vs. M/s. Rajasthan State 2 Mines & Mineral Ltd., Jaipur, decided on 21 st April, 2016, and in DB Income Tax Reference No.29/1998, in the case of Commissioner of Income Tax, Jaipur vs. M/s. Rajasthan State Mines & Minerals Ltd., Jaipur, decided on 21 st April, 2016, relevant portion whereof is reproduced as under:
"We find that while challenging the order passed on a proceeding under Section 148 of the Act of 196, the revenue took other issues also, which includes, the issue raised herein. The High Court accordingly framed substantial questions of law. It was as to whether the ITAT was justified in holding the expenditure as business expenditure when the assessee had acquired benefits of enduring nature, thus to be taken as capital expenditure. The revenue did not pursue the appeal and accordingly, the assessment got confirmed where the same expenditure was accepted towards revenue/business expenditure.
The question for our consideration is as to whether the same expenditure for subsequent assessment year can be given different treatment.
No doubt, it is true that principal of res judicata does not apply but whether the revenue can take different and inconsistent view on one and the same issue. Whether payment to the State Government for the work assigned to the assessee can be taken as business expenditure for one assessment year and capital expenditure for the next years? In the assessment year of 1989-90, it was shown to be revenue/business expenditure. The proceedings under Section 148 of the Act of 1961 were initiated but held to be void. In the appeal before the High Court, a substantial question of law on the issue referred herein was framed but the revenue failed to pursue the issue as the appeal was dismissed for default. If the reference is answered in favour of the revenue by holding that amount of Rs.6 crore was wrongly allowed towards revenue/business expenditure, the outcome would be nothing but inconsistency in the 3 assessment for one and the same assessee and, that too, for the one and same expenditure. If the argument taken by the revenue is allowed to be sustain then for the year 1989-90, the same expenditure remains in contradiction and, that too, when not only the revenue was having opportunity to challenge the assessment but even substantial question of law was also framed on it but thereafter, it was not perused. In the case of M/s. Radhasoami Satsang Saomi Bagh, Agra vs. Commissioner of Income Tax reported in (1992) 1 SCC659, the issue of res judicata and consistency has been dealt with para Nos.18 & 19 are quoted hereunder for ready reference:
18. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
19. On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was not change it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income Tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act of 1961.
The judgment in the case of Commissioner of Income Tax, Central, Kanpur Vs. JK Charitable Trust, Kamal Tower, Kanpur reported in (2009) 1 SCC 196 has been referred by learned counsel for the revenue 4 but therein challenge on the same issue was allowed in certain cases only. The case in hand is not such.
In view of the above, we are of the opinion that reference to the question cannot be answered in favour of the revenue. It is more when, the case has peculiarity in as much as the assessee before us is none-else but a Government undertaking. It is informed to this Court that the matter was earlier taken before the High Power Committee as dispute is between the Government and its undertaking.
The fact aforesaid is also taken note of by this Court while answering the reference herein.
In view of the discussion made above, we are of the opinion that the amount of Rs.6 crore accepted towards revenue/business expenditure is not illegal, rather taking into consideration the assessment year 1989-90, where the same expenditure was taken as revenue/business expenditure, we are unable to take a consistent view and accordingly, the reference is answered against the revenue and in favour of the assessee."
6. In that view of the matter, the issue is answered in favour of the assessee and against the department.
7. The appeal stands dismissed.
(DINESH MEHTA), J. (K.S. JHAVERI), J. Asheesh Kr. Yadav 71