1998 (7) TMI 137 - AT - Income Tax

Assessee's petition dismissed for failure to follow precedents and statutory interpretation.

The Tribunal dismissed the assessee's miscellaneous petition, emphasizing the importance of following judicial precedents and the correct interpretation ... Zero-Tax Companies, Unabsorbed Depreciation, Depreciation Allowance, Appellate Tribunal Issues Involved:1. Allowance of Depreciation2. Principles of Natural Justice and Opportunity of Hearing3. Binding Nature of Precedents4. Interpretation of Section 115J and Related ProvisionsSummary:1. Allowance of Depreciation:The Tribunal initially decided the issue of depreciation allowance in the case of Shriram Investments Ltd. However, in the subsequent case of the assessee on 29-4-1997, the Tribunal did not follow its earlier decision due to the influence of the Hyderabad Tribunal in Pennar Steels Ltd. and the Andhra Pradesh High Court in Suryalatha Spg. Mills Ltd. The Tribunal argued that these decisions, which interpreted section 115J of the Income-tax Act, were not brought to the notice of the assessee's counsel, thus denying them the opportunity to make submissions on these decisions. The Tribunal concluded that the difference between book depreciation and income-tax depreciation should not be considered as actually allowed within the meaning of sections 43(1) and 43(6) of the Act.2. Principles of Natural Justice and Opportunity of Hearing:The assessee argued that the Tribunal committed errors by not following the decision in Shriram Investments Ltd. and by not allowing the assessee's counsel to make submissions on the decisions of the A.P. High Court and the Hyderabad Tribunal. The Tribunal countered that there was no agreement to allow the assessee's appeal based on Shriram Investments Ltd. and that the decision of the A.P. High Court was correctly followed. The Tribunal emphasized that it is not required to issue show-cause notices for decisions it intends to follow, and that the Tribunal's duty is to pass orders based on the law, even if it involves decisions not cited by the parties.3. Binding Nature of Precedents:The Tribunal held that the principle of res judicata does not strictly apply to its decisions and that it can take a different view if there are new facts, circumstances, or judicial precedents. The Tribunal referred to the decision of the Supreme Court in CIT v. Brij Lal Lohia & Mahabir Prasad Khemka, which supports the view that the findings of fact in earlier proceedings do not operate as res judicata in subsequent years if new evidence is presented. The Tribunal also noted that the decision of one High Court is not binding on another High Court or Tribunal outside its jurisdiction, but it should be followed unless there are compelling reasons not to.4. Interpretation of Section 115J and Related Provisions:The Tribunal discussed the interpretation of section 115J, emphasizing that it involves two processes: determining income under normal provisions and then computing book profit. The Tribunal rejected the argument that section 115J sterilizes other provisions of the Act, stating that such an interpretation would lead to absurd and illegal consequences. The Tribunal also distinguished between section 115J and section 44AD, noting that the latter specifically provides for deeming depreciation as allowed, while section 115J does not. The Tribunal concluded that the assessee's arguments were based on assumptions and not supported by the statute.Conclusion:The Tribunal dismissed the assessee's miscellaneous petition, holding that there was no mistake apparent from the record in its order dated 29-4-1997. The Tribunal emphasized the importance of following judicial precedents and the correct interpretation of statutory provisions, rejecting the arguments of the assessee's counsel regarding the sterilization of other provisions of the Act under section 115J.