2011 (4) TMI 827

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....t lease rent computed on the basis of the profit of the business. During the assessment year 2005-06, the assessee had received a license fee of Rs. 3,59,88,998. It has also received an interest income of Rs. 13,35,240 and it claimed expenditure of Rs. 68,09,588 under different heads. The dispute between the parties is whether the said income is to be assessed under the head 'Business Income' or 'Income from other sources'. The said dispute settled in the earlier round of litigation. It was held that it is to be assessed as income from other sources. The Assessing Authority held that as the income is to be treated as income from other sources, the assessee is not entitled to deduction as allowable in the case of business income and therefor....

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....ore, the authorities were not justified in ignoring the finding recorded in the earlier orders and disallowing the deductions claimed which are identical as in the case of previous 7 years. Even otherwise, he contends that the authorities have not gone into the question whether these expenditure have any direct nexus with the business that is carried on by the assessee and if the assessee is able to show the nexus, he is entitled to deductions. Therefore he submits that the authorities have committed a serious error in not keeping the settled legal position in mind and also the requirements of the law and therefore, the order impugned is liable to be set aside. 4. Per contra, the learned Counsel for the revenue supporting the impugned orde....

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.... res judicata does not apply in matter pertaining to tax for different assessment years because res judicata applies to debar Courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The Courts will generally adopt an earlier pronouncement of the law or a conclusion of act unless there is a new ground urged or a material change in the factual position. The reason why Courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent asse....

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....ions are not permissible. Section 57 (iii) provides that any other expenditure not being in the nature of capital expenditure laid out or expended wholly and exclusively for the purpose of making or earning such income are deductable from the income from other sources while computing the income from other sources. If the assessee is eligible to establish a nexus between the expenditure incurred and the income derived, then certainly he would be entitled to the deduction under the aforesaid provision. Even that exercise has not been done by any of the authorities. In that view of the matter, the order passed by the three authorities is not in accordance with law and cannot be sustained. Hence, we pass the following: ORDER   (i)  ....