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TMI Blog2011 (3) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the facts and in the circumstances of the case, the Ld. Tribunal was justified in law deleting the disallowance of consultancy fees of Rs.8,03,985/- even though, the expenses was in connection with the future business prospects of the assessee?" The facts giving rise to filing of this appeal may be summed up thus: (a) M/s. Shri Krishna Bottlers (Vijayawada) Pvt. Ltd. ("SKB") held a license from Pepsico Inc. U.S.A., for use of the trademark Pepsicola, Lehar, Mirinda, etc. in conjunction with an Indian trademark in relation to beverage products to be bottled, sold distributed and marketed in the so-called Vijaywada territory consisting of several districts in the State of Andhra Pradesh under the licensing agreement dated 29th December, 1990. (b) The said licence agreement was initially for a period of ten years, renewable for an additional term of five years. The Assessing Officer pointed out that the Board of Directors of the Assessing Company at its meeting held on 1st November, 1995 considered the potentiality of the market for Pepsicola and other brands of the renowned Pepsico Inc., U.S.A. for their soft drinks in the aforesaid Vijayawada territory and decided to take ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and could find out a buyer namely M/s. Pearl Drinks Ltd. owned by one Mr. Chandra Kant Jaipur. The entire shares of the company were thus sold by the assessee at the agreed price of Rs.18,33,752/- vide share purchase agreement dated December 23, 1995 after revaluation of the assets and liabilities as on November 30, 1995. This payment was also received by the Assessee Company from M/s. Pearl Drinks Limited through account payee cheque and Demand Draft. (e) The Assessing Officer pointed out that as a result of the above transaction, the Assessee Company incurred a short term capital loss of Rs.8,59,77,725/- (Rs.8,78,11,500/- minus Rs.18,33,752/-). The Assessing Officer further pointed out that the Assessee Company had decided to take over the shares of M/s. SKB after considering the pros and cons of the business project of the company and after having made a detailed market survey. Thus, according to the Assessing Officer, at the time of acquiring the shares, the Assessee Company must have been aware of the necessity of making further investment in the business and must have taken into account such future liability. According to the Assessing Officer, the period of one mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of M/s. McDowell & Company Ltd. vs. Commercial Tax Officer, reported in (1985) 3 SCC 230 and contended before us that the aforesaid sale of shares was a device and thus, the Assessing Officer was quite justified in refusing the claim of the assessee and the Commissioner of Income-tax (Appeal) and the Tribunal below erroneously set aside such decision. 4. Mr. Saraf submits that the subsequent decision of the Supreme Court of Two-Judge-Bench in the case of Union of India vs. Ajadi Bacho Andolon (2003) 263 ITA 706, should not be followed by us because the said decision was given by a Bench consisting of two Judges whereas the earlier decision in M/s McDowell & Company Ltd. was given by a larger Bench. The other ground taken by the Revenue in this appeal is as regards the deduction of consultancy fees of Rs.8,03,985/- paid to M/s. Norwath Hospital Consultancy, U.K., for conducting market/feasibility survey to explore the possibilities of setting up a hospital in Seychellois. According to the Assessing Officer, as the assessee was dealing with a different type of business, hence the project of setting up a hospital in a foreign country should not be considered to be an expansio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t decision of the Supreme Court which is binding upon it. The position, however, would be different if the subsequent smaller Bench of the Supreme Court in ignorance of the earlier larger Bench takes a contrary view from the one taken by the earlier larger Bench. In that situation, the High Court is entitled to reject the view of the latter smaller Bench of the Supreme Court as per incuriam. 7. In the case before us, the subsequent decision of a Smaller Bench in the case of Ajadi Bacho Andolon (supra), has taken note of the earlier decision in the case of M/s. McDowell & Company Ltd. (supra), and has interpreted the same and thus, it is not a case of passing decision in ignorance of a binding decision. Therefore, in this case, the view taken by the Tribunal cannot be said to be wrong and is consistent with the one taken in the case of Ajadi Bacho Andolon (supra). 8. Mr. Saraf in this connection placed strong reliance upon a decision of Three-Judge-Bench in the case of Official Liquidator vs. Dayanand and others, reported in (2008) 10 SCC 1 in support of his contention that we should totally ignore Azadi Bachao Andolon (surpa). In that case, the Supreme Court observed with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we deem it proper to clarify that the comments and observations made by the two-Judge Bench in U.P. SEB v. Pooran Chandra Pandey should be read as obiter and the same should neither be treated as binding by the High Courts, tribunals and other judicial foras nor they should be relied upon or made basis for bypassing the principles laid down by the Constitution Bench." 9. In our opinion, so long the decision in the case of Azadi Banhao Andolon (supra) is not held to be per incuriam by a larger Bench decision of Supreme Court as done in the case of Official Liquidator vs. Dayanand and others relied upon by Mr. Saraf, the High Courts should be bound by the explanation of that Bench given to the decision in the case of M/s. McDowell & Company Ltd. (supra). 10. Even on merit, we also do not appreciate the reason of the Assessing Officer that the assessee company could have easily waited for a reasonable period of time for watching the market and could also have invested a further amount of Rs.9 to 10 crore to revive the business of M/s. SKB. It is not within the province of the Assessing Officer to ignore an otherwise genuine transaction and to brand it as a colourable one on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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