2007 (6) TMI 65 - HC - Income Tax

Court reaffirms settled tax issues cannot be revisited under Section 154

The judgment delivered by P.D.DINAKARAN, J. pertains to tax case appeals against the order of the Income-tax Appellate Tribunal for the assessment years ... Deduction - AO contended that deduction in respect to STD not allowed on the ground that interest received on STD is taxable under the head 'Income from other sources ' - Held that issue was debatable so that assessee claim can't be disallowed in rectification proceeding Issues:1. Whether the Tribunal was right in holding that the order under Section 154 was wrong when the issue was clearly settled by orders of the High Court and Supreme CourtRs.Analysis:The judgment delivered by P.D.DINAKARAN, J. pertains to tax case appeals against the order of the Income-tax Appellate Tribunal for the assessment years 1996-97 and 1997-98. The main issue raised was whether the Tribunal was correct in holding that the order under Section 154 was wrong, despite the issue being settled by previous High Court and Supreme Court orders. The assessee, engaged in the hotel business, claimed relief under Section 80HHD of the Act for the mentioned assessment years. The Assessing Officer rectified the assessment, stating that interest earned on short term deposits was taxable under income from other sources. The Commissioner of Income Tax (Appeals) upheld this decision, leading to further appeals before the Income Tax Appellate Tribunal.In a previous case, Commissioner of Income Tax v. Sharp Industries, the Court held that a claim for deduction under Sections 80HHC and 80I could not be disallowed under Section 154, especially when interest income was included in the business's profit. The current judgment applied the same principle and concluded that there was no substantial question of law for consideration. As a result, the appeals were dismissed, including M.P.No.1 of 2007.Therefore, the judgment reaffirmed the principle that certain issues, once settled by higher courts, cannot be revisited under Section 154 of the Act. The Tribunal's decision to allow the appeals was overturned based on the settled legal position established by previous court orders.