Rajasthan High Court - Jaipur
Commissioner Of Income-Tax vs Globe Transport Corporation, Shambhu ... on 31 January, 1991
Equivalent citations: [1992]195ITR311(RAJ), 1991(1)WLC232
JUDGMENT N.C. Sharma, J.
1. This order will dispose of three D. B. Civil Miscellaneous Applications Nos. 332 of 1988, 331 of 1988 and 329 of 1988 filed by the Commissioner of Income-tax, Jaipur, under Sections 151 and 152 of the Code of Civil Procedure by a common order as all these three applications involve a common question of law.
2. M/s. Globe Transport Corporation carried on a business of transportation. With respect to the previous year ending Deepawali Samvat 2032 relevant to the assessment year 1976-77, it filed return of its income disclosing an income of Rs. 94,660. The Income-tax Officer, 'B' Ward, Jaipur, passed an assessment order on February 19, 1979. The assessee had debited an amount of Rs. 19,485.28 under the head "Expenses" in its profit and loss account. The account showed that these expenses had been incurred on tea, betel, cigarettes, etc. The Income-tax Officer disallowed an amount of Rs. 15,000 on estimate treating it as expenses on entertainment. On appeal, the Commissioner of Income-tax (Appeals), Jaipur, by his order dated June 18, 1979, reduced the additions made by the Income-tax Officer on account of entertainment expenditure to Rs. 10,000 from Rs. 15,000. The assessee filed a further appeal before the Income-tax Appellate Tribunal and before the Tribunal, it was contended on its behalf that the expenditure in question was incurred in providing tea, cigarettes, pan, etc., to drivers, agents, customers and employees and that these expenses were customary and incidental to the business. The Tribunal held that these expenses were incurred in providing drinks, tea, coca cola, etc., to the constituents, customers and employees of the assessee and that they were incidental to the business. It was held by the Tribunal that such expenditure cannot be said to be in the nature of entertainment. On an application being made by the Commissioner of Income-tax, the Income-tax Appellate Tribunal, Jaipur Bench, by its order dated July 1, 1981, referred the following question of law to this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenses of Rs. 10,000 are not in the nature of entertainment expenditure ?"
3. M/s. Shambhu Dayal Ram Pal was a partnership firm carrying on a business at Chomu in sugar, jaggery, khand and arat. In relation to the accounting period ending Deepawali relevant to the assessment year 1978-79, it declared an income of Rs. 85,234 in its return. The case of the assessee was that the up country constituents visited its business premises and that it was customary for the assessee to provide food, tea, cool drinks, snacks, etc., to them. The assessee claimed a total expenditure of Rs. 14,950 as expenses incurred on these items for its constituents. The Income-tax Officer, J-Ward, Jaipur, by his order dated October 31, 1979, disallowed a sum of Rs. 9,900 in terms of Section 37(2A) of the Income-tax Act as, in his opinion, such expenditure was in the nature of entertainment. On appeal, the Appellate Assistant Commissioner, '13' Range, Jaipur, by his order dated March 21, 1980, held that these expenses were customary in nature in the assessee's line of business and did not constitute entertainment expenses within the meaning of Section 37(2A) of the Income-tax Act and, therefore, allowed the deduction of the amount of Rs. 9,900 from the assessee's income. On appeal by the Revenue, the Income-tax Appellate Tribunal, Jaipur Bench, by its order dated March 26, 1981 upheld the order of the Appellate Assistant Commissioner. On an application being moved by the Commissioner of Income-tax, Jaipur, the Income-tax Appellate Tribunal, Jaipur Bench, by its order dated March 3, 1982, referred the following question of law to this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the expenses of Rs. 9,900 incurred on providing food, tea, coffee, etc., to the assessee's constituents are not in the nature of entertainment expenditure under Section 37(2B) of the Income-tax Act, 1961 ?"
4. So far as the third assessee, M/s. Rameshwur Dayal and Co., is concerned, it was a registered firm and derived its income from arat in gur and khandsari. In relation to the accounting period Deepawali Samvat 2032 relevant to the assessment year 1976-77, the assessee claimed deduction of a total amount of Rs. 15,009 as "choka expenses" (i.e., mess expenses) on the ground that they were incurred to earn "arat". According to him, the adatias came from U.P. to effect sales of goods and he had to provide amenities to "aratias". The Income-tax Officer, "C" Ward, Jaipur, disallowed the deduction of this amount having regard to the provisions contained in Section 37(2B) of the Income-tax Act, 1961. On appeal, the Commissioner of Income-tax (Appeals) upheld the order of the Income-tax Officer in this regard. He held that, in view of the decision of the Allahabad High Court in Brij Raman Dass and Sons v. CIT [1976] 104 ITR 541, the Income-tax Officer was right in holding that these expenses were in the nature of entertainment expenditure which was not allowable according to the provisions of Section 37(2B) of the Income-tax Act, 1961. The assessee went in further appeal before the Income-tax Appellate Tribunal which was allowed by the Tribunal. The Tribunal held that the expenditure incurred by the assessee was by way of providing hot, cold drinks, lunch, etc., to its customers which was customary in nature in the line of business carried on by the assessee and. it did not constitute "entertainment expenditure". On an application being moved by the Commissioner of Income-tax, the Tribunal, by its order dated April 29, 1981, referred to this court the following question of law :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that messing expenses of Rs. 15,000 do not constitute entertainment expenditure within the meaning of Section 37(2B) of the Income-tax Act, 1961 ?"
5. All these three references were registered in this court as D. B. Income-tax References Nos. 135 of 1981, 79 of 1982 and 85 of 1981, respectively, and were answered by similar orders passed on 2nd, 3rd and 6th May, 1988. This court held :
"Following these decisions, it has to be held that these expenses are allowable as business expenditure under Section 37(213) of the Income-tax Act, 1961. The Tribunal's view in the assessee's favour is, therefore, justified.
Consequently, the reference is answered in the affirmative, in favour of the assessee and against the Revenue by holding that the Tribunal's view is justified."
6. Thereafter, on July 4, 1988, the Commissioner of Income-tax, Jaipur, filed the present three D. B. Civil Miscellaneous Applications Nos. 332 of 1988, 331 of 1988 and 329 of 1988, under Sections 151 and 152 of the Code of Civil Procedure with the prayer to rectify/modify/review this court's orders dated 2nd, 3rd and 6th May, 1988, in the above three references and it may be answered in them that the expenses to the extent of Rs. 5,000 only are allowable and the balance expenses are not allowable to the assessee as deductions.
7. It was urged by Mr. V. K. Singhal, appearing for the Revenue, that the provisions of Section 37(2A) as inserted by the Taxation Laws (Amendment) Act, 1967, were not noticed and considered at the time of deciding the three references whereby on the first Rs. 10,00,000 of the profits and gains of the business, the maximum amount allowable as entertainment expenditure was only Rs. 5,000. Moreover, Explanation 2 below Section 37(2A) was inserted by the Finance Act, 1983, with retrospective effect from April 1, 1976, to declare the meaning of "entertainment expenditure" as including expenditure on provision of hospitality of every kind by the assessee to any person excluding expenditure on food or beverages provided by the assessee to his employees in the office, factory or other place of their work. On this basis, it was urged that the assessee was entitled to the relief of Rs. 5,000 only and that the excess expenditure allowed by the Tribunal is liable to be disallowed in view of the Second Explanation read with Section 37(2A) of the Act. Learned counsel urged that this court may, accordingly, rectify or modify its orders answering the three references accordingly.
8. The main question which arises for determination is that the references under Section 256(1) having already been answered by this court in the affirmative, can this court, under Section 151 or Section 152, C. P. C., rectify, modify or review its answer even if there is an error in the answer on account of the fact that the provision contained in Section 37(2A) with Explanation 2 thereto was not taken into consideration. It is clear from the provisions of the Income-tax Act, 1961, that the Code of Civil Procedure as such does not apply to the proceedings under the Income-tax Act, 1961. Section 131 of the Income-tax. Act would go to show that, for a limited purpose of discovery and inspection, enforcing the attendance of any person including any officer of a banking company and examining him on oath, compelling the production of books of account and other documents and issuing commissions, the Assessing Officer, Deputy Commissioner (Appeals), Deputy Commissioner, Commissioner (Appeals) and Chief Commissioner or Commissioner have, for the purposes of the Act, been given the same powers as are vested in a court under the Code of Civil Procedure when trying a suit.
9. So far as reference to the High Court is concerned, all that is provided in Section 259 of the Income-tax Act is that, when any case has been referred to the High Court under Section 256, it shall be heard by a Bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges. Then, it is provided in Section 260 that the High Court, upon hearing any such case, shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment.
10. As regards rectification of mistakes, there is provision in Section 154 of the Income-tax Act, 1961, which states that, with a view to rectifying any mistake apparent from the record, an income-tax authority referred to in Section 116 may--(a) amend any order passed by it under the provisions of the Act; (b) amend any intimation sent by it under Section 143, or enhance or reduce the amount of refund granted by it under that section. The authority concerned can make amendments of its own motion and also when the mistake has been brought to its notice by the assessee or, where the authority concerned is the Deputy Commissioner (Appeals) or the Commissioner (Appeals), by the Assessing Officer also. The income-tax authorities referred to in Section 116 of the Act are the Central Board of Direct Taxes, Director-General of Income tax or Chief Commissioners of Income-tax, Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals), Deputy Directors of Income-
tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals), Assistant Directors of Income-tax or Assistant Commissioners of Income-tax, Income-tax Officers, Tax Recovery Officers and Inspectors of Income-tax. The High Court exercising powers under Sections 256 and 258 to 260 of the Act on a reference made to it by the Appellate Tribunal by drawing up a statement of the case is not included amongst the "income-tax authorities" referred to in Section 116 of the Act and, consequently, the High Court cannot exercise the power of rectifying any mistake apparent from the record under Section 154 of the Act.
11. The power of review is not inherent in a court or Tribunal. It is a creature of the statute. A court or Tribunal cannot review its own decision unless it is permitted to do so by statute. The courts having general jurisdiction like civil courts have inherent power. But the courts or Tribunals of limited jurisdiction created under special statutes have no inherent power. (See Gopinath Deb v. Budhia Swain, AIR 1983 Orissa 31, 33).
12. Section 152, C. P. C., equally has no application in the case. It is also clear that, under Section 152 of the Code, only clerical errors or arithmetical mistakes or errors arising from any accidental slip or omission can be corrected. The present is not a case where any clerical or accidental error has taken place. The references were answered by a conscious decision after referring to two earlier decisions of the court in Pratap Cotton Trading Co. v. C1T [1987] 167 ITR 36 (Raj) and Mangilal Vijay Kota v. CIT [1987] 167 ITR 37 (Raj).
13. We may refer to the decision of their Lordships of the Privy Council in CIT v. Tehri-Garhwal State [1934] 2 ITR 1, wherein the Privy Council observed at page 8 :
"It is to be noticed that under Section 66(5) of the Indian Income-tax Act, 1922, the judgment of the High Court is to contain the grounds upon which the decision is founded : that a copy of the judgment is to be sent to the Commissioner, and that the case is to be disposed of by the income-tax authorities 'conformably to such judgment'. Under this provision, their Lordships think that the judgment as a whole is binding between the parties in the particular case. If the judgment expounded a wrong construction of the Act, as the appellant now contends, an appeal against it was open, and there is no other procedure by which it could be corrected."
14. In Seth Mathuradas v. CIT [1940] 8 ITR 412, a Division Bench of the Nagpur High Court held that an application for a review of the judgment passed in a reference under Section 66 of the Indian Income-tax Act, 1922, was not maintainable, for a Tribunal which determines the questions referred under that section does not operate as a civil court so as to attract the provisions of the Civil Procedure Code.
15. In Emperor v. Kajori Mal Kalyan Das [1930] 4 ITC 60 ; AIR 1930 All 211, it was held that, for the reason that this kind of an opinion is not a decree or order, there could be no review of such a judgment.
16. The Calcutta High Court, in CIT v. Hungerford Investment Trust Ltd. [1935] 3 ITR 188, have also laid down the same proposition where it was held that the court, when acting under the powers conferred by Section 66 of the Indian Income-tax Act, 1922, was exercising a special jurisdiction and that its proceedings were not governed by the Code of Civil Procedure and that no review lay.
17. We may also refer to a Division Bench decision of the Allahabad High Court in Addl. CIT v. Hasmat Rai Raj Pal [1988] 170 ITR 191 (in which his Lordship K. C. Agarwal J., at present Chief Justice of this court was a party). It was observed at page 196 of the reported judgment :
"We are of the view that the jurisdiction, which the High Court exercises under Section 256. of the Income-tax Act, 19G1, is only an advisory jurisdiction and not that of original, appellate or revisional jurisdiction. Under the Income-tax Act, there is no power of review conferred on the High Court and we are not inclined to hold that in the absence of such specific conferment of such power, this court can exercise the power of review or of recalling its previous judgment purporting to exercise power under Order 47, Rule 1, or Section 151, CPC. We are conscious of the fact that the High Court may exercise its inherent jurisdiction in order to do justice in special circumstances, such as to rectify a mistake of clerical nature which had crept in by inadvertence or restore a case when dismissed in default on the cause being shown reasonable or even when the case was decided on merits without due notice to parties or to a party concerned on account of the mistake of the High Court office. The exercise of such power is different from those conferred under Order 47, Rule 1, or under Section 151, CPC. The grounds on which the present application has been moved seeking review or recalling of our order dated January 22, 1987, are not of the type on which any review can be sought invoking the inherent jurisdiction of this court."
18. The decision in L. Hirday Narain v. ITO [1970] 78 ITR 2G (SC) relied upon by Mr. V. K. Singhal, appearing for the Revenue, has no relevance whatsoever to the present case as this decision dealt with the power of the Income-tax Officer to rectify an error apparent from the record in exercise of the powers conferred by Section 35 of the Indian Income-tax Act, 1922, corresponding to the powers of the income-tax authorities under Section 154 of the Income-tax Act, 1961.
19. Mr. V. K. Singhal referred to us two orders dated May 25, 1988 of this court in D. B. Income-tax Reference Application No. 53 of 1982, and D. B. Civil Miscellaneous Application No. 299 of 1988, wherein the earlier orders passed by this court in income-tax references were modified even after the questions of law referred being answered. Suffice it to state that, in neither of these two cases (CIT v. Indian Dairy Entrepreneurs and CIT v. Sunil Synchem Ltd.), was the question whether this court, after answering the reference, has the power to review the answer or to rectify mistakes in the answer or not raised or decided. Moreover, in CIT v. Indian Dairy Entrepreneurs (Reference Application No. 53 of 1982), two questions were required to be answered in the reference but the court on April 1, 1988 answered only one question. By oversight, the second question was not answered. Both the Revenue as well as the assessee had applied for modification of the order dated April 1, 1988, and to answer the second question. The modification was thus made on the common request made on behalf of both the sides. In CIT v. Sunil Synchem Ltd., Alwar (Misc. Application No. 299 of 1988), the point involved was exactly similar to the point in CIT v. Indian Dairy Entrepreneurs. Since the question whether Order 47, Rule 1, or Section 151 or 152, CPC, could be invoked after a reference under Section 256 of the Income-tax Act, 1961, has been answered by the High Court was neither raised nor decided in these two cases, the order dated August 25, 1988, passed therein would not assist the Revenue.
20. In view of the above discussions, we hold that the three D. B. Civil Miscellaneous Applications Nos. 332 of 1988, 331 of 1988 and 329 of 1988 for rectification/modification or review of this court's order dated 2nd, 3rd and 6th May, 1988, respectively, passed by this court in D.B. Income-tax References Nos. 135 of 1981, 79 of 1982 and 85 of 1981 do not lie and are, consequently, dismissed. No order as to costs.