TMI Blog2017 (3) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable assessment year did not have power to add back the profit of ₹ 245.09 crores arising out of sale of investments to the total income of the assessee. Mr. Nizamuddin also could not explain to us why deviation was made on treatment of profits on sale of investments for the two assessment years. On binding nature of the aforesaid Circular of 1988, no negative argument has been advanced on behalf of the Revenue. We find that on no occasion earlier to or later than these two assessment years, the Revenue had preferred any appeal before the Tribunal or otherwise questioned such reduction by the assessee. In the cases of Sarita Agarwal (2002 (7) TMI 103 - SUPREME Court ) and Shivsagar Estate (2000 (12) TMI 909 - SUPREME COURT), special leave petitions of the Revenue were dismissed by the Supreme Court having regard to the fact that no appeal had been carried against the orders of identical assessments for the previous years. The same principle ought to apply in respect of the assessment year 2005-2006, with which this appeal is concerned. As regards assessment year 2006-2007, we are dealing with the same in another appeal filed by the Revenue before us. - Decided aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originally included a sub-clause (b). The said subclause specified:- (b) (i) deduction in respect of any amount either written off or provided in the accounts to meet diminution in or loss on realisation of investments in accordance with the regulations made by Insurance Regulatory and Development Authority; (ii) increase in respect of any amount taken credit for in the accounts on account of appreciation of or gains on realisation of investments in accordance with the regulations made by Insurance Regulatory and Development Authority; The said sub-clause was deleted by the Finance Act, 1988. The Notes on Clauses of the Finance Bill, 1988 [as reproduced in (1988)170 ITR (St.)] 166 stipulated:- The proposed amendment seeks to omit clause (b) and the proviso thereunder so as to exempt profits and gains on investments made by the General Insurance Corporation of India and the four companies formed under section 16 of the General Insurance Business (Nationalisation) Act, 1972. Sub-clause (b) was again introduced by the Finance Act, 2009 with effect from 1st April, 2011 in the following terms:- (b) (i) any gain or loss on realisation of investments shall be added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. The Assessing Officer in an order passed on 31st December 2007 under Section 143(3) of the Act rejected the claim of the assessee for reduction of ₹ 245.09 crores from book profit and added back the said sum to the total income computed for the purpose of income tax assessment. The assessment order deals with certain other issues, but this appeal is primarily concerned with dealing of profit from sale or redemption of investments. For the next assessment year, 2006-07, same course was followed by the Assessing Officer. The CIT in appeal of the assessee deleted the addition of ₹ 245.09 crores. We would like to point out here that the order of the CIT (Appeals), as annexed to the stay petition related to an order passed on 16th January, 2012 in respect of a proceeding under Section 147/143(3) of the Act. The order of the CIT (Appeals), against which appeal was preferred before the Tribunal was passed on 21st December, 2011. A copy of this order passed in Appeal No. 320/VI/WD 5(2)/07-08/Kol was produced before us by the learned counsel for the Revenue. We direct this copy to be retained with the records. The Revenue went up in appeal before the Income Tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 528 of 16th December 1988 have binding effect on Revenue:- (i) Navnit Lal C. Javeri v. K. K. Sen, Appellate Assistant Commissioner of Income-Tax, Bombay [(1965)56 ITR 198, 203 (SC)] (ii) Varghese (K.P.) v. ITO [(1981)131 ITR 597, (iii) Paper Pucrtods Ltd. v. Commissioner of Central Excise [(2001) 247 ITR 128 (SC) (iv) CCE v. Dhiren Chemical Industries [(20020 254 ITR 554 (SC)] (v) State of Kerala and Others v. Kurian Abraham Pvt. Ltd. and Another [(2008) 303 ITR (SC)] (vi) Steel Authority of India v. Collector of Customs, Bombay [(2000) 115 ELT 42 (SC) = (2001) 9 SCC 198 (SC) In all these authorities, impact of circulars issued by the Revenue Authorities under different statutory provisions have been held to be binding on the Revenue. In the case of Steel Authority of India (supra), the Supreme Court dealt with an exemption notification as also a trade notice issued by the customs authorities and held:- This Court has consistently held that the authorities are bound by the trade notices and they issued and cannot argue to the contrary Second limb of Mr. Poddar s submission is that if on a particular point the earlier decisions of the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) in Rule 5 to the said schedule. Main stand of the assessee is on binding nature of the circular, so far as income tax authorities are concerned. Even if a circular appears to go against statutory provisions, Mr. Poddar has submitted, referring to the judgment of the Supreme Court in the case of Paper Products Ltd. v. Commissioner of Central Excise (supra), the circular would prevail. In this judgment it has been held that:- The question for our consideration in these appeals is : What is the true nature and effect of the circulars issued by the Board in exercise of its power under section 37B of the Central Excise Act, 1944 ? This question is no more res integra in view of the various judgments of this court. This court in a catena of decisions has held that the circulars issued under section 37B of the said Act are binding on the Department and the Department cannot be permitted to take a stand contrary to the instructions issued by the Board. These judgments have also held that the position may be different with regard to an assessee who can contest the validity or legality of such instructions but so far as the Department is concerned, such right is not available. (see ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
