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Kerala High Court

Commissioner Of Income Tax vs Chemmeens (Regd.). on 6 April, 1992

Equivalent citations: (1992)106CTR(KER)1

Author: K. S. Paripoornan

Bench: K. S. Paripoornan

JUDGMENT

K. S. PARIPOORNAN, J. :

These are connected cases. ITR No. 100/86 and ITR No. 116/89 go together. They relate to the asst. yr. 1976-77, year ending 31st December, 1973. ITR No. 97 of 1989 relates to the asst. yr. 1978-79, year ending 31st December, 1977. It is at the instance of the Revenue, certain questions of law are referred, in all these tree cases, for the decision of this Court by the Tribunal. The common assessee is the respondent in all these cases. All the relevant papers to be looked into for the purpose of deciding these references are contained in the Paper Book filed in ITR No. 100 of 1986. In ITR No. 100/86, one question has been referred for the decision of this Court by the Tribunal, for the asst. yr. 1976-77. For the same year, as directed by this Court, on motion by the Revenue, in OP No. 1151 of 1987, the Tribunal has referred two additional questions, for the decision of this Court; that form the subject matter of ITR No. 116 of 1989 (Relevant papers are in the Paper Book relating to ITR No. 100/86). In ITR No. 97 of 1989, only one question has been referred by the Tribunal for the decision of this Court, at the instance of the Revenue.

2. The question referred in ITR No. 100/86 and ITR No. 116/89, on the one hand (for the asst. yr. 1976-77), and the sole question referred in ITR No. 97 of 1989 (for the asst. yr. 1978-79) are as follows :

ITR No. 100 of 1986

Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 23,076 by way of ECGC premium is entitled to weighted deduction under s. 35B of the IT Act ?

ITR No. 116 of 1989

1. Whether, on the facts and in the circumstances of the case, and in view of the fact that "the assessee had declared the value of stock as on 19th December, 1975 at Rs. 37,74,953 in a statement furnished to the Bank" the Tribunal is right in relying on the profit and loss account wherein the assessee had declared the closing stock value at Rs. 3,22,061 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that "there is no need to interfere with the order of the CIT(A) in his deleting the addition of Rs. 12,65,658 although for a different reason" and is not the deletion and the reasons of the appellate authorities for the deletion wrong, untenable, unwarranted, illogical and unsupported by relevant materials ?

ITR No. 97 of 1989

Whether, on the facts and in the circumstances of the case, was the Tribunal right in law and fact in deleting the addition of Rs. 18,85,000 as difference in closing stock made by the ITO ?"

3. We heard counsel on both sides. Mr. P. K. R. Menon, senior counsel, appeared for the Revenue and Mr. P. C. Chacko, Advocate appeared for the assessee/respondent, in all the cases. The sale question referred in ITR No. 100 of 1986 raises the controversy as to whether the expenditure of Rs. 23,076 incurred by the assessee by way of ECGC premium will be entitled to weighted deduction under s. 35B of the IT Act. The Tribunal, in paragraph 5 of its order dt. 19th April, 1985, held that the assessee is entiled to weighted deduction under s. 35B of the Act as held by the CIT(A) in accord with the decision of the Special Bench of the "Tribunal in the case of J. Hemchand & Co. vs. ITO (1982) 1 SOT 150 (Bom)(SB). Counsel for the Revenue brought to our notice the unreported decision of this Court in CIT vs. M/s. Indian Emporium (ITR No. 139 of 1985). That is a judgment rendered by a Bench of the Court, dt. 14th June, 1989, wherein one of us was a party. An identical question arose for consideration in the said case. It was noticed in the said decision that the decision of the Special Bench of the Tribunal in J. Hemchand & Co. case is pending in appeal before the Supreme Court. Even so, the CBDT has issued a Circular dt. 28th December, 1981 substantially adopting the decision of the Special Bench of the Tribunal in J. Hemchand & Co. case (supra) and the assessee will be entitled to the benefit of the said circular as an administrative relief. In these circumstances, while declining to answer the question referred to this Court in that case, which is similar to the one referred to this Court in ITR 100 of 1986, this Court directed the Tribunal to restore the appeal to file for the limited purpose of considering as to whether and to what extent the assessee will be entitled to weighted deduction under s. 35B of the Act in the light of the circular issued by the CBDT dt. 28th December, 1981. The said circular is referred to in two decisions in CIT vs. Novelty Trading Corpn. (1984) 150 ITR 453(All) at page 454 and CIT vs. Jay Engineering Works (1984) 149 ITR 297 (Del). The said circular has been extracted in detail in a Bench decision of this Court in CIT vs. Kerala Nut Food Co. (1991) 192 ITR 585 (Ker).

4. Following the earlier Bench decision of this Court in ITR No. 139 of 1985, dt. 14th June, 1989, we direct the Tribunal ton apply its mind to the circular issued by the CBDT dt. 28th December, 1981 to the extent it affords administrative relief, by adopting the decision in J. Hemchand & Co. case, and adjudicate the matter afresh regarding the relief the assessee is entitled to by way of weighted deduction under s. 35B of the IT Act in respect of the premium paid to Export Credit Guarantee Corporation. We decline to answer the sole question referred to this Court in ITR No. 100 of 1986; but dispose of the reference as detailed above by directing the Tribunal of consider the question afresh in the light of the circular of the CBDT dt. 28th December, 1981.

5. The more important controversy raised in this batch of cases is covered by the two questions referred to this Court in ITR No. 116 of 1989 and the sole question in ITR No. 97 of 1989. A common aspect arises for consideration therein. The assessee had obtained various loans from the bank while carrying on its business. The assessee had filed financial statements before the ITO detailing or specifying the value of the closing stock. For example, for the asst. yr. 1976-77 the assessee had admitted the value of the closing stock, in the statement filed before the ITO, at Rs. 3,22,062. On enquiry, the ITO found that the assessee had declared to the bank the value of the stock as on 19th December, 1975 at Rs. 19,88,145. Admittedly, there was great disparity or variance in the figure furnishing the closing stock to the department and to the bank. From the very beginning the assessee pleaded before the ITO that in order to obtain higher loan facilities from the bank it was in the habit of inflating its stock both in terms of quantity and value. The assessees specific plea was that the figures given to the bank did not represent the actual closing stock. The ITO declined to accept the above plea. According to him, the assessee had declared the value of stock as on 19th December, 1975 at Rs. 37,74,953, in a statement furnished to the bank. He worked out the closing stock as on 31st December, 1975 by taking the stock declared to the bank as on 19th December, 1975 at Rs. 37,74,953 and by adding to the same the purchases from 19th December, 1975 to 31st December, 1975, and after deducting exports during the period and the difference in opening stock as on 1st January, 1975 of Rs. 20,10,658. In this process, he arrived at the figure of Rs. 15,87,720 and fixed the said figure as the closing stock of the assessee as on 31st December, 1975. The assessees closing stock shown to the department was only Rs. 3,22,062. So, the ITO added the difference between Rs. 15,87,720 and Rs. 3,22,062, i.e., Rs. 12,65,658 as the closing stock of the assessee, for the asst. yr. 1976-77. In appeal, the CIT(A) held that there were two types of inflations in stock. One was inflation in the quantity of stock declared to the bank and the other was the inflation in the value as per unit of the stock declared. He held that no addition could be made for the second, i.e., inflation in the value as per unit of the stock declared. Regarding the first type of inflation, the CIT(A), after examining the employee of the assessee-firm, who personally present, and the other relevant papers, held that the stock declared to the bank were not true and cannot be acted upon. The CIT(A) categorically held that the inflated figures were shown to the bank only for the purpose of obtaining loans. On the above hypothesis, the first appellate authority - CIT(A) -held that there is no justification for making an addition to the income based on the declaration given to the bank, since the stock declared to the bank was not true and cannot be acted upon. The matter was taken in appeal by the Revenue on the above aspect and by the assessee on certain other aspect and that is how ITA No. 231/Coch/1982 (filed by the Revenue) and ITA No. 138(Coch)/1982 (filed by the assessee) - both for the asst. yr. 1976-77 - were heard together and disposed of by a common order dt. 19th April, 1985 by the Tribunal. The Tribunal, after noticing the rival pleas put forward by the Revenue as well as the assessee and after noticing the reasoning and finding the of the CIT(A) on a different reasoning. The Tribunal did not consider as to whether the plea of the assessee, that it was in the habit of inflating its stock, both in terms of quantity and value in the statements furnished to the bank and such inflation was so made in order to obtain higher loan facilities, was true and correct. Instead of adjudicating that plea, which was put forward by the assessee from the beginning and substantially accepted by the CIT(A) the Tribunal on an entirely different reasoning, upheld the conclusion arrived at by the CIT(A). According to the Tribunal, notwithstanding such discrepancies in the statement furnished to the bank and to the department by the same assessee for the asst. yrs. 1975-76, 1977-78, 1979-80 and 1980-81, the department had acted and conducted itself in accord with the plea of the assessee and having done so the Revenue should have adopted the same procedure for all the assessment years and should not single out certain assessment years only. In other words, in evaluating the plea of the assessee, that in order to obtain higher loan facilities from the bank it was in the habit of inflating the stock and so on sanctity can be given to the stock statement as on 31st December, 1975, in view of the non-demur to the said plea by the Revenue for the year immediately preceding the relevant assessment year and also for subsequent years, the Revenue should have adopted the same procedure for all the assessment years and should not single out certain assessment years only. Briefly stated, the Tribunal has opined that in the case of the same assessee, when identical questions come up for consideration for different assessment years, the Revenue should not be permitted or allowed to adopt inconsistent stands. It is on these reasoning, the Tribunal upheld the conclusion of the CIT(A) without adjudicating as to whether the plea of the assessee that it furnished an inflated statement to obtain higher credits from the bank was true and tenable in law.

6. Both sides covered a wide spectrum in order to substantiate their respective view points. Counsel for the Revenue attacked the reasoning and conclusion of the Tribunal as perfunctory, laconic and illegal. It was argued that the Tribunal failed to adjudicate the main plea put forward by the parties, side-tracked the real issue and upheld the conclusion of the CIT(A) on a different reasoning - which lacks legal basis and is also otherwise unsubstantial and value. On the other hand, counsel for the assessee, Mr. P. C. Chacko, defended the order of the Tribunal as legal, proper and reasonable; it was argued that in effect the Tribunal concurred with CIT(A) on facts, that the stock furnished by the assessee to the bank is inflated and unreal and cannot form the basis for the addition and that was so having regard to the conduct and act of the conduct and act of the Revenue for the earlier and later years when such reality of the situation was given effect to, about which he Tribunal made reference and sustained the conclusion of the CIT(A). The Tribunal only gave effect to state of affairs which resulted in a "consistent pattern" in the matter regarding the assessee for all the years, on a particular aspect and this is reasonable and fair. The Tribunal acted only property in doing so.

7. Counsel for the Revenue, Mr. P. K. R. Menon, highlighted the following aspects, in attacking the order of the Tribunal :

(i) The doctrine of res judicata or estoppel will not apply to income-tax assessments. Each year is an independent unit. The findings on questions of fact in an year may be good and cogent evidence in subsequent years when the same question falls to be determined. But, they are not final and conclusive. Reliance was placed on the decision in M. M. Ipoh vs. CIT (1968) 67 ITR 106 (SC) at page 118.

(ii) The fact that a wrong evaluation or method or principle was given effect to or followed in one year cannot form the basis for an assessee to insist that the same principle should be followed for other years. There is no vested right in an erroneous order. Reference was made to the decision in CIT vs. Central India Industries Ltd. (1971) 82 ITR 555 (SC).

(iii) If at all, the principle of estoppel can apply only to the same assessment and not to different or successive assessments. In other words, in making an assessment for a particular year, the Revenue may not adopt inconsistent attitude or yard stick. Reliance was placed on the decision in M. K. Mohammed Kunhi vs. CIT (1973) 92 ITR 341 (Kar).

(iv) The assessee itself furnished the statement to the bank regarding the "stock". It is bound by such solemn statement. It cannot be departed from. The assessee cannot adopt inconsistent stand in such matters, by giving different statements to the bank and to the Income-tax Department. The IAC as also the assessing authority have worked out the closing stock as on 31st December, 1975, as is evident from paragraph 9 of the proceedings of the IAC and also page 28 of the Paper Book. If the assessee was aggrieved by any different principle adopted for a different year, he should have taken up the matter in appeal. But, such act or conduct adopted for a different year cannot in any way deter or preclude the Department from taking a different stand for another year.

8. On the other hand, counsel for the assessee, Mr. P. C. Chacko, laid stress on the following aspects :

(i) The CIT(A) accepted the plea of the assessee that the "stock" furnished to the bank is unreal and inflated. That was so done after adverting to materials available in the case. Cogent reason has been given for accepting the plea of the assessee. The Tribunal adverted to the entire history of the case - the assessment order passed, the findings thereon, the appellate order passed by the CIT(A) and the relevant findings and the rival arguments put forward by the Revenue and the assessee before the Tribunal - and then upheld the conclusion of the CIT(A). The entire order of the Tribunal should be read as a whole to understand what the Tribunal has said in the matter. Reliance was placed on the decision in CIT vs. Karam Chand Thapar & Bros. (1989) 2 SCC 31 : (1989) 176 ITR 535 (SC).

(ii) Though the principle of res judicata may not apply, the findings or the conduct in an earlier year will be cogent evidence when an identical question of fact or law comes up for consideration in a later year. Reference was made to the decisions in M. M. Ipoh vs. CIT (supra); E. V. Koradu vs. Commr. of Agrl. IT (1980) 122 ITR 615 (Ker) and CIT vs. Velimalai Rubber Co. Ltd. (1990) 181 ITR 299 (Ker). In the absence of compelling circumstances, the previous decision should not be departed [see CIT vs. Belpahar Refractories Ltd. (1981) 128 ITR 610 (Ori)].

(iii) The Appellate Tribunal has referred to the fact that for the earlier assessment year and the subsequent assessment years the department has in effect accepted the conduct of the assessee and given effect to the reality of the situation-that the assessee has given an inflated figure of the closing stock to the bank and that did not represent the correct state of affairs. Having in terms accepted the said reality of the position or situation for prior years and for subsequent years, it was not open to the Revenue to pick out a particular year and to take an inconsistent stand. In other words, the Revenue cannot approbate and reprobate or blow hot and cold or adopt inconsistent positions. Reference was made to the decision of the Supreme Court in Nagubai vs. B. Shama Rao AIR 1956 SC 593-para 23, highlighting the principle of approbate and reprobate. [(see also Verschures Creameries Ltd. vs. Mull & Netherlands Steamship Co. Ltd. (1921) 2 KB 608 and Kuppanna vs. Peruma AIR 1961 Mad 511 - para 15]. Great stress was also laid that the Department cannot blow hot and cold or take up inconsistent positions, by reference to the following decisions : Deoniti Prasad Singh vs. CIT (1947) 15 ITR 165 (Pat); C. T. Narayanan Chettiar vs. CIT (1966) 60 ITR 690 (Mad) and Baijnath Brijmohan & Sons P. Ltd. vs. CIT (1986) 161 ITR 234 (Bom).

9. We considered the rival pleas aforesaid with care and evaluated them in the light of the appellate order passed by the Tribunal. On a reading of the order of the Tribunal, we are left with the impression that the above rival pleas were never highlighted before the Tribunal. Even the basic premises have not been stressed or highlighted before the Tribunal, though attempt has been made by both parties to explain the order of the Tribunal from the various angles now pressed before us, for the first time. The various aspects pressed before us require scanning of the various materials in a very different perspective and questions of fact, the conduct of the parties and the circumstances in which the various pleas were taken up, or the assessment made, should be evaluated with care. In other words, the facts will have to be ascertained and evaluated. In the absence of relevant facts or findings, it will not be proper to adjudicate the various legal aspects, now stressed before us.

10. Reading the order of the Tribunal as a whole, we are left with the impression that the Tribunal has simply side-tracked the issue. We will extract the operative portion of the order of the Tribunal, dt. 19th April, 1985 in disposing of the appeal.

(Para 4.5) "....... From the beginning it is the case of the assessee that in order to obtain higher loan facilities from the bank it was in the habit of inflating its stock, both in terms of quantity and value. From the statement (marked item No. 14 in the paper book filed by the assessee) filed by the assessee, it is clear that no additions have been made by the Department when the discrepancies were there in the stock declared to the Department and the stock declared to the Bank for the asst. yrs. 1975-76, 1977-78, 1979-80 and 1980-81. When the assessee is urging that much reliance cannot be placed on the statement given to the bank for obtaining loans, it is not known why the Department has attached sanctity to the statement of stock given as on 19th December, 1975 and why they have not given such equal sanctity to the stock statement given as on 31st December, 1975. If at all the Department wanted to rely on the statements given to the bank, they should have adopted the same procedure for all the assessment years and not single out certain assessment years only. Further, there is no reason for the Department not treating the closing stock as on 31st December, 1975 at Rs. 15,87,720 as adopted by them for the purpose of asst. yr. 1976-77 as the opening stock as on 1st January, 1976 for the purpose of asst. yr. 1977-78. In these circumstances, there is no need to interfere with the order of the CIT(A) in his deleting the addition of Rs. 12,65,658, although for a different reason. This ground is also decided against the Department."

11. The Tribunal, in an earlier paragraph (para 4) dealt with the plea of the Department that the CIT(A) was in error in deleting the entire addition on account of excess stock fully accepting the arguments of the manager of the assessee-firm. In paragraph 4, the finding of the ITO in the assessment order was adverted to. In paragraph 4.2, the plea of the assessee before the CIT(A) is catalogued. In paragraph 4.3, the plea of the Revenue is highlighted. In paragraph 4.4, the stock statements as on 31st December, 1974 and 31st December, 1975 declared to the bank, letter dt. 28th June, 1980 from the assessee to the Indian Bank, banks letter dt. 7th November, 1970 to the assessee, copy of the report dt. 28th April, 1980 by the statutory auditors of Indian Bank, and other details are adverted to and also the plea of the assessee that the Department has not followed a "consistent practice", in that notwithstanding the discrepancy in the stock statement given to the bank, the department has not made any addition in the earlier and later assessment years. It is adverting to these aspects, the Tribunal came to its own decision in paragraph 4.5 (extracted herein above-para 10). We are stressing these aspects only to show that though there was an elaborate review of the rival pleas put forward by the assessee and the Revenue before the Tribunal as also reference to various documents on which parties placed reliance, the Tribunal preferred to base its decision highlighting only the inconsistent practice or stand taken by the department for different assessment years. The Tribunal did not enter any definite finding on merits, namely, whether in the light of the admitted difference in the stock statements furnished to the Department and the bank, the plea of the assessee that it gave an inflated account of the stock to the bank to enable it to get higher margin of credit was true and borne out by records and even so whether it was a valid or enable plea that could be urged by the assessee. That was the sole factor on which the Revenue as well as the assessee joined issue all along and a large volume of material was let in to adjudicate the said controversy. What deterred the Tribunal from entering a definite finding on that score is anybodys guess.

12. As stated by us earlier, in paragraph 9 of this judgment, both sides explained the order of the Tribunal from different angles. We are of the view that the finding and conclusion of the Tribunal in paragraph 4.5 of its order is rather vague and ambiguous. The Tribunal highlighted two aspects in paragraph 4.5 of its order, It noticed the plea of the assessee that in order to obtain higher loan facilities from the bank it was in the habit of inflating its stock, both in terms of quantity and value. There were discrepancies in the stock declared to the department and to the bank. It was so done by the assessee for the asst. yrs. 1975-76, 1977-78, 1979-80 and 1980-81 also. The Revenue did not make any addition for other years though the circumstance that prevalied was similar to the asst. yr. 1977-78. According to the Tribunal, the department should have adopted the same procedure for all the assessment years and not single out certain assessment years only. This was the main reason which prompted the Tribunal declining to interfere with the order of the CIT(A) in deleting the addition. There was also a subsidiary reason, in that no reason existed for the department in not treating the closing stock as on 31st December, 1975 as adopted by them, for the asst. yr. 1976-77 as the opening stock as on 1st January, 1976 for the purpose of asst. yr. 1977-78. We are of the view that the subsidiary reasoning given is a matter which should be agitated by the assessee in any appeal that it may file from the assessment order for the asst. yr. 1977-78. Referring to the main reason given by the Tribunal, for declining to interfere with the deletion of the addition ordered by the CIT(A), we are unable to discern the exact legal basis on which the Tribunal held that the department should adopt the same procedure for all the assessment years. Had the Tribunal in mind the principle of estoppel in stating so ? It is not clear. Will the principle of estoppel apply, if inconsistent stand is taken for different years and not for the same year. That requires an in-depth study. Or had the Tribunal in mind only the morality of the stand taken by the Revenue in adopting different procedure for different years ? Is such an approach permissible or valid in law, is a matter which requires elucidation. When and in what circumstances the Department is precluded from taking an inconsistent stand, in a different year, is a matter which requires analysis on legal basis. Or is it a case where the Tribunal had in mind the principle of "election" - that a party cannot "approbate and reprobate" or "blow hot and cold" or "play fast and loose", at the same time ? (See Spencer Bower -Third Edition - Estoppal by Representation, page 359 Para 336). How far is the species of estoppel apply, for all the assessment years, is another aspect which requires investigation. We are posing the above queries just to highlight our difficulty in understanding the legal basis for the order of the Tribunal when it said that the department should adopt the same procedure for all the assessment years and not single out certain assessment years only. What is the legal basis for stating this and what aspect operated in the mind of the Tribunal in coming to the said conclusion further evaluation as to whether the basis on which it is so said and the conclusion is valid in law will arise for consideration. In coming to a definite conclusion on the above aspect, the rival pleas urged before us (stated by us in paragraph 7 and 8 -supra) as also the problem in adjudicating the rival pleas which we have indicated in paragraph 9 hereinabove, have their impact and role to play in reaching the decision.

13. We are also of the view that certain other aspects may also arise for consideration. It is trite law that statutory power should be exercised bona fide, reasonably and without negligence and for the purpose for which they were conferred. (See Halsburys Laws of England Third Edition - Volume 30 - page 688, para 1327). It is now well settled by the decisions of Courts, that a decision rendered by a statutory authority can be successfully attacked, if it is (1) illegal or (2) unfair and (3) unreasonable or irrational. [See Balakrishna Pillai vs. State of Kerala 1988 (2) KLT 1039 (FB)]. What these three labels cannot has been explained in very many decisions. We do not know whether the Tribunal had in mind the view that the Revenue should act "fairly" (and not arbitrarily) and so should adopt the same procedure for all the assessment years and not to single out certain assessment years only. Was the Tribunal of the view that to adopt different procedure for different assessment years is unfair and arbitrary ? If this is the legal basis to sustain the order of the Tribunal, the matter may require a deeper analysis quantitatively and qualitatively in the decisions of the Supreme Court in E. P. Royappa vs. State of Tamil Nadu AIR 1974 SC 555; Ajay Hasia vs. Khalid mujib AIR 1981 SC 487 and other similar cases. The matter has got far reaching consequences, since the duty to act "fairly" is an inbuilt safeguard enshrined in Art. 14 of the Constitution of India. This is not a plea to estoppel, but stems from a constitutional guarantee under Art. 14 of the Constitution of India. That is why we stated that the matter has got various dimensions. The same aspect can be viewed from a different focus also. Was the Tribunal of the view that failure to adopt the same procedure for all the assessment years only, is unreasonable or irrational ? In other words, consistency is a hallmark of being reasonable. This aspect is different from fairness and is based on the Wednesbury principle (1948) 1 KB 223 - See -G. B. Mahajan vs. Jalgaon Municipal Council AIR 1991 SC 1153. In an article, "Beyond Wednesbury : Substantive Principles Law" (1987 Public Law, page 386 at p. 377) the authors Jeffrey Jowell and Anthony Lester deal with the principle of consistency in these words :

"The principle of consistency is applied without hesitation in Community law. It was confirmed at least tentatively in English law in H. T. V. Ltd. vs. Price Commission (1976) ICR 170 (CA) and in Re Preston (1985) AC 835 (HL) where it was acknowledged that fairness requires officials to follow their rules in like cases and not to breach their own contracts or representations. In the recent case of Asif Khan the Court of Appeal held that the Home Office was bound by the terms of a Circular although there was no prejudicial reliance upon it."

How far the above statement of the law is applicable is a moot question.

14. In the light of the above discussion, we hold that the Appellate Tribunal has failed to enter a decision in accordance with law. The appellate order rendered by the Tribunal is vague and ambiguous. The Tribunal has failed to consider very important points and aspects that arose for consideration. It has abruptly concluded that the Department cannot take inconsistent stand for different years and in that perspective affirmed the decision of the CIT(A) which was rendered on a different finding. In such circumstances, we are of the view that it is not possible or proper to answer the two questions referred to this Court in ITR No. 116 of 1989 and the sole question in ITR No. 97 of 1989 without causing injustice to the parties. Therefore, we decline to answer the two questions referred to his Court in ITR No. 116 of 1989 and the sole question in ITR No. 97 of 1989. At the same time, we direct the Tribunal to restore the appeals to its file and dispose of the appeals in accordance with law and in the light of the observations contained herein. We are fortified in doing so in the light of the decisions of the Supreme Court in CIT vs. Greaves Cotton & Co. Ltd. (1968) 68 ITR 200 (SC), CIT vs. Indian Molasses Co. P. Ltd. (1970) 78 ITR 474 (SC) and the Bench decision of this Court in CIT vs. Seshasayee Bros. (Travancore) Pvt. Ltd. (1976) 102 ITR 372 (Ker).

15. As stated in paragraph 4 of the judgment, we decline to answer the sole question referred to this Court in ITR No. 100 of 1986; but we direct the Appellate Tribunal to consider that question afresh in the light of the Circular of the CBDT dt. 28th December, 1981.

The references are disposed of as above.