TaxTMI 
TaxTMI 
1991 (7) TMI 27
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....proprietor of the business, Sree Muruga Tile Works, Chittur. While so, the assessee took his son in the business as a partner. Thus, from the assessment year 1973-74 onwards, the business was run by the firm. This is evidenced by the partnership deed dated May 17, 1972. In the partnership deed, there is a clause specifying that the assets of the business of the tile factory would continue to be the exclusive property of the assessee and that the other partner will have no manner of right over the same. None the less, in the books of account of the partnership based on which the balancesheet has been prepared, all the assets and liabilities of the assessee in the business as the proprietor were treated as assets and liabilities of the firm. Not only that, the assessee had been given full credit for Rs. 1,52,560 in his capital accounts which was a figure brought forward from the books of the business carried on as a proprietary concern. These assets consisted of buildings, machinery, press, etc., which had been taken over by the firm at book value from the proprietary concern. That the Tribunal had rejected the case of the assessee and that though these assets had been shown in th....
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.... Tribunal was justified in holding that the assessee was not entitled to depreciation in view of its finding that the assessee was not the owner of the assets. Whether the finding of the Tribunal that the assessee was not the owner of the assets was right or not is not the subject of any question referred to us. Perhaps, it could be said that had it been a question, it would have to be answered, for, it was not purely a question of fact but a question of law the answer to which depended on the inference from the facts found. There is no occasion to consider that question now because despite a positive finding by the Tribunal that the assets were of the firm and not of the assessee and a further finding that in that view depreciation cannot be allowed, the question referred is only whether depreciation should be allowed. ( Md. Salih v. CIT [1973] Tax LR 775). Therefore, so long as there is no challenge to the basic finding, the answer can be only against the assessee. Hence, we answer the question in the affirmative, that is, in favour of the Department and against the assessee. " It is in this backdrop that the dispute, namely, whether the properties in dispute could be treated ....
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....es continued to be the properties of the proprietor who got the business converted into a partnership as in this case. Counsel further submits that there is no scope to go into the correctness or otherwise of the said finding. For this reason, the above argument of the Revenue is liable to be rejected, counsel submits. It is now settled law that the decisions on questions of income-tax and rating assessments constitute an important exception to the general rules as to res judicata and as such decisions given in regard to one year's tax or rates do not give rise to estoppel binding the parties in respect of another year's tax or rates. It is so, because, such decisions by the income-tax authorities (within the meaning of section 116 of the Incometax Act) are made at an administrative level in that they are not made by a court or a Tribunal in a lis between two parties. Yet another reason that should be borne in mind in this context is that the question of the liability of the taxpayer for the subsequent year's tax or rate is not to be regarded as the same question as that of his liability for the first. Taxation and rating assessments are decisions 'sui generis" to which the prin....
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....hat a court of record is a judicial Tribunal for the purpose of the doctrine of estoppel per rem judicatam. By now, it is equally well-established that not only a court of record but all Tribunals properly described as a person or body of persons, exercising judicial functions under statute, common law, etc., or otherwise in accordance with law are judicial Tribunals. It is not as if the decisions rendered by such judicial Tribunals are all judicial decisions. We, therefore, have to find out what a judicial decision is. To name a decision as a judicial decision, two things must be established ; and they are : (1) the judex, i.e., the judge or the judicial Tribunal should have decided some question of law or fact, and (2) such decisions are rendered in the course of resolving a true lis inter partes. We must, therefore, have both a judex/judge/judicial Tribunal and a judicium or judgment/decision, rendered in a lis inter partes deciding or determining some question of law or fact for purposes of establishing res judicata. (See Spencer Bower and Turner on Res judicata, Second Edition, Chapter II). The High Court, admittedly, is a court of record. In a proceeding before the High Court....
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.... subsequent suit is one of the limitations engrafted on the general rule of res judicata by section II of the Code and has application to suits alone. When a plea of res judicata is founded on general principles of law, all that is necessary to establish is that the court that heard and decided the former case was a court of competent jurisdiction. It does not seem necessary in such cases to further prove that it has jurisdiction to hear the latter suit. A plea of res judicata on general principles can be successfully taken in respect of judgments of courts of exclusive jurisdiction, like revenue courts, land acquisition courts, administration courts, etc. These courts are not entitled to try a regular suit and they only exercise special Jurisdiction conferred on them by the statute." Referring to this decision, the Supreme Court, in a later decision in Daryao v. State of U. P., AIR 1961 SC 1457, observed (at page 1463) : ". . . the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full contest, even though the first Tribunal which decided the matter may have no jurisdiction to try the subsequent suit and even tho....
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....challenge the finding (which he ought to have challenged) by getting an appropriate question referred to this court for opinion, namely, whether the finding that the properties in dispute belonged to the firm, entered by the Tribunal while disposing of the appeals relating to the years of assessment 1973-74 and 1974-75, the said finding must be held to operate as constructive res judicata barring the assessee from raking up the said dispute in proceedings for assessment for subsequent years. Viewed from another angle, the said findings in any case provide good and cogent evidence when the same question falls to be determined in another year although they are not binding and conclusive. However, in order to say that the said findings by themselves do not clinch the issue, the assessee shall establish with other materials that the properties in dispute in fact belong to him exclusively and as such cannot be treated as the asset of the firm. It is all the more so because the balance-sheet which provides the basis for the above findings does reflect the true state of affairs as regards the assets owned by the firm. It should, in this connection, be remembered that the main object of....