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M/s. NEPC India Ltd. Versus The Deputy Commissioner of Income-tax

2016 (5) TMI 1181 - ITAT CHENNAI

Sales turnover computation - Held that:- the decision of the Tribunal is binding on the Assessing Officer and he cannot pick up a word or sentence from the order of the Tribunal de hors the context of the question under consideration and construe it to be complete law declared by the Tribunal. A judgment must be read as a whole. Being so, the Assessing Officer cannot sit in judgment over the order of the Tribunal, and he is required to give just effect to the order of the Tribunal. If he has any .....

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were inter-divisional transfers

Levy of interest u/s.220(2) - Held that:- The period specified under section 220(1) has to be taken into consideration from the date of passing of the fresh assessment order and not the earlier assessment order, which has been set aside. Accordingly, this issue is decided in favour of the assessee. - ITA No. 2260/Mds/2013 - Dated:- 6-4-2016 - Shri Chandra Poojari, Accountant Member And Shri G. Pavan Kumar, Judicial Member For the Appellant : Shri R. Si .....

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the case. 2. The CIT (Appeals) erred in sustaining the determination of/quantification of depreciation on six wind turbine generators which resulted in restriction of claim of such depreciation in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the directions contained in the Appellate Orders were not followed in proper perspective and ought to have appreciated that the precise challenge on the non implem .....

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s.7,21,99,652/- in the computation of taxable total income without assigning proper reasons and justification. 6. The CIT (Appeals) went wrong in recording the findings in this regard in para 9 of the impugned order without assigning proper reasons and justification and ought to have appreciated that directions contained in the Appellate Orders were not complied with in proper perspective. 7. The CIT (Appeals) erred in sustaining the levy of interest u/s 220(2) of the Act aggregating to Rs.34,56 .....

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d fortify the plea for acceptance of such levy and ought to have appreciated that non consideration of the binding decision reported in 325 ITR 346 would vitiate his action in relation thereto. 9. The CIT (Appeals) failed to appreciate that the decision cited to support the plea for reworking the interest u/s 220(2) of the Act which decision was reported in 48 DTR 167 was not taken into consideration and not referred to, thereby vitiating his action in relation thereto. 10. The CIT(Appeals) went .....

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cture and sale of wind turbine generators. The name of the company is subsequently changed to M/s NEPC India Ltd. For the assessment year 1994-95, it originally filed the return of income on 30/11/1994 admitting an income of Rs. 62.94 lakhs. This return was processed under section 143(1) of the Act on 30/10/1995 and a refund of Rs. 26,06,645/- was determined. The assessment was taken up for scrutiny subsequently and the regular assessment under section 143(3) of the Act was completed on 27/3/199 .....

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sues were restored back to the Assessing Officer for fresh consideration. This order was given effect to by the Assessing Officer on 22/6/1998 and the same was revised on 7/8/1998 as per which the income was determined at Rs. 10,45,24,360/- and a demand of ₹ 5,27,12,347/- was determined. By order dated 31/8/1998 this was revised to give effect to the payment of Rs. 25 lakhs made on 4/4/1994. Against giving effect to order dated 24/8/1998 an appeal was filed before CIT(A) which was dismisse .....

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er dated 21/6/2000 determining the total income at Rs. 11,89,99,770/- raising a demand of Rs. 10,20,50,332/-. The Assessing Officer has passed a fresh order on 31/1/2002 u/s 143(3) r/w sec.250 to give effect to the order of the Commissioner of Income-tax (Appeals) setting aside certain issues. In this order the income determined was Rs. 11,66,45,843/- raising a demand of Rs. 9,22,50,005/-. This demand was reduced by order dated 7/8/2002 to ₹ 9,22,28,390/-. The CIT has passed an order dated .....

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by the Assessing Officer on 27/3/2006 in which income determined was loss of ₹ 776.64 lakhs and a refund of Rs. 5,84,90,692/- was determined by the Assessing Officer. This order of the Assessing Officer dated 27/3/2006 was set aside by the Commissioner of Income-tax, Chennai Ill, Chennai by his order dated 25/3/2008 and against the said order, an appeal to the ITAT was filed on 23/4/2008. 3.2 The order of the Commissioner of Income-tax passed u/s 263 was given effect to by the assessing o .....

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ing a tax of ₹ 35,24,32,262/- by determining the total income at Rs. 26,43,39,420. The appeal filed before the CIT(Appeals) against the order dated 29/12/2010 was decided by the Commissioner of Income-tax (Appeals) I, Coimbatore on 27/7/2011 in ITA No. 263/10-11 by partly allowing the appeal. The order of the CIT(A) was given effect to by the Assessing Officer on 30/9/2011 determining the total income at Rs. 24,62,67,120/- demanding a tax of ₹ 65,44,47,917/-(addl. Demand raised was & .....

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under section 220(2). The appeal filed against the assessment order dated 18/3/2013 before the CIT(Appeals) and the CIT(Appeals) was dismissed the appeal on 18/11/2013 in ITA No. 73/13- 14. Against this, the assessee is in appeal before us. 4. The ld. AR submitted that the assessee originally claimed that it has manufactured 209 WTGs out of which 159 WTGs were sold to outsiders and 50 WTGs were transferred to assessee s own division. However, the AO found that assessee had produced only 156 WTGs .....

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manufacture at Rs. 1,09,46,41,000/- by dividing 209 WTGs and arrived at the cost of 6 WTG of Rs. 3,14,25,096/- and allowed the depreciation at 50% of sale worked to ₹ 1,57,12,548/-. According to ld. AR, considering the total manufacturing cost of ₹ 1,09,46,41,000/- and divided the same by 209 WTG to arrive the cost of each WTG is not correct. Since there was categorical finding by the Tribunal in ITA No.1019/Mds/2002 dated 13.12.2002 for the assessment year 1997-98 that inter-divisi .....

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would also have to be reduced to the cost of 34 numbers of WTG capitalised in the year which is evident from paragraphs 23 & 24. According to the ld. AR, these findings of the Tribunal have reached finality and there is no further appeal by the Revenue on this issue. 4.1 Further, the Tribunal while deciding the appeal filed by the assessee against the order passed u/s.263 of the Act by the CIT on the same issue for the asst. year 1994- 95 in ITA No. 1041/Mds/2008 dated 19.6.2009 held as foll .....

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he matter came to this Tribunal, this Tribunal has directed the Assessing Officer to verify the number of Wind Turbine Generators that were actually installed in the assessee s won division and then allow the depreciation passed on the facts that they were commissioned and so certified by the State Electricity Board. In the given effect order, the Assessing Officer has reduced the sale price of 59 WTGs at Rs. 3,893.86 lakhs but corresponding cost has been reduced only in respect of 6 WTGs which .....

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6 WTGs but reduced the sale value of 59 WTGs from the sale proceeds which has resulted the net income as loss. Though, we are not convinced with the view of the Commissioner of Income Tax that this Tribunal has not directed for reduction of the sale value from the sale of the assessee in respect of the Wind Turbine Generators which were transferred to the other division of the assessee but in the giving effect order, the Assessing Officer has wrongly reduced the sale value of 59 Wind Turbine Ge .....

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e appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so that by the statute as held by the Hon ble Supreme Court in the case of Kapurchand Shrimal Vs. Commissioner of Income Tax, Andhra Pradesh reported in 131 ITR 451. We also place reliance on the decision of the Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Smt. S. Vijayalakshmi reported in 242 ITR 46; in the case of Commissioner of Income Tax Vs. Ramnath G .....

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, the Revenue authorities have not considered the above findings of the Tribunal and the findings of the lower authorities, both, the AO and the CIT(Appeals) were decided the issue contrary to the above findings of the Tribunal. According to the ld. AR, the total cost of manufacture of WTG to be apportioned between 156 WTGs only and correspondingly sales value of 53 WTGs to be reduced from total sales. In other words, inter-divisional transfers cannot be treated as sales and to that extent the s .....

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then he has to grant depreciation on 6 inter-division transferred WTGs on cost price. Further, the ld. AR submitted that the AO has to determine cost of 156 WTGs by apportioning the total cost of manufacture and consider the cost of each WTG and, therefore, he has to determine the profit of the assessee and exclude inter-divisional sales from out of the net profit, which has not done in this case. Therefore, he prayed to rectify the mistake. 5. On the other hand, the ld. DR submitted that the i .....

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n effect to the order of CIT(A) dated 8.8.2012. 5.1 Further, the ld. DR submitted that even otherwise, cost of one WTG adopted by the AO in the impugned order is Rs. 52.37 lakhs which very much tally with the working given by the assessee itself in the appeal filed before the CIT(A). Thus, eligible depreciation on WTGs worked out by the assessee itself is Rs. 157.14 lakhs, which the same thing allowed by the AO in the impugned order. 5.2 The ld. DR further submitted that again, cost of each WTG .....

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he assessee may be dismissed as the assessee is not aggrieved. According to the ld. DR, the only dispute raised by the assessee in the present appeal is regarding the number of WTG manufactured by it during the year which is the division to determine the unit cost. This fact is evidence from cl.12 in Sch.12 of printed annual accounts for FY. 1993-94 i.e. 209 WTGs. 5.3 Regarding computation of profit element of 53 WTGs, the ld. DR submitted that according to the assessee, profit element of 59 (53 .....

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profit element of another 6 WTGs at Rs. 81.73 lakhs which have to be excluded from taxable income Sch.II to the impugned assessment order shows that AO has strictly followed the directions of the appellate authority and adopted the figure of profit as given in the appellate order. This order of the CIT(A) was accepted by both the assessee and department and thus it has reached finality. Accordingly, the ld. DR submitted that since the AO has followed the binding direction of the CIT(A) which wa .....

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nation of cost of 6 WTGs which represents inter-divisional transfer and allowability of depreciation on it. 6.1 The chronological events of the case are follows : 1. The assessee filed return of income 30.11.1994 2. The return was scrutinized and regular assessment was completed u/s.143(3) 27.03.1997 3. Aggrieved by that order, the assessee went in appeal before CIT(A), who partly allowed the appeal 24.04.1998 4. Against the CIT(A) s order, the assessee carried the matter before the Tribunal in .....

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in appeal against that order before the CIT(A), who passed the order 27.07.2011 11. Giving effect to the order of the CIT(A) by the AO 30.09.2011 12. Again, the assessee went in appeal before the CIT(A), who allowed the appeal of the assessee 08.08.2012 13. Again, giving effect to the order of the CIT(A) by the AO 18.03.2013 14. Against that order, the assessee Once again went in appeal before CIT(A), who dismissed the appeal 18.11.2013 Now, the assessee is in appeal before us against the order .....

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hat wind mills that are sold to outside parties are no longer the assets of the company. Wind mills that were transferred to other units and which were commissioned, were directed to be considered for allowing of depreciation based on the fact that they were commissioned and so certified by the State Electricity Board and we direct accordingly. Likewise in respect of asset fixed assets also which are owned by the assessee for which information is available, the Assessing Officer shall examine an .....

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ort) of 68 numbers, which the assessee had shown as sales but required to be reduced from the expenditure because it related to capitalisation of WTG. The WTGs were transferred to the Power Division and accordingly the assessee claimed depreciation on the said WTGs. 24. The assessee apparently purchased 371 WTGs of which 34 numbers were capitalised by it for its own purpose in the Power Unit or Power Division. The assessee showed the transfer of 34 numbers of WTGs from the manufacturing unit to .....

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nsfer does not result in a sale and the assessee cannot be said to have earned any profit. In that case the A.O. was directed to verify the cost of manufacture and that such cost of manufacture should be reduced from the cost or expenditure as claimed by the manufacturing unit and such cost would have to be treated as capital cost for the 24 WTGs. In M.P.No.13/Mds/03 arising out of ITA No.1019/Mds/02(A.Y.1997-98), consequent to the omission to consider the additional grounds raised in its order .....

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ould also have to be reduced to the cost of 34 numbers of WTGs capitalised in the year. The value at which they have to be capitalised is in the same fashion as has been directed to be determined by the Tribunal in its order dt. 13-12-03 in the case of the assessee for the assessment year 1997-98 to which reference is made above. The A.O. will carry out the same exercise in respect of the present assessment year also. The A.O. further would consider the claim of depreciation by keeping in mind t .....

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e s own power division. The Assessing Officer, in the original assessment order clearly proved that the assessee could not have produced 209 WTGs and held that only 156 WTGs were actually manufactured by the assessee, out of which only 6 WTGs were internally transferred as against 59 claimed by assessee. The A.O. conducted enquiries with TNEB, Gujarat Energy Development Authority and correlated the details with details of consumption of Iron & Steel, critical parts used for manufacture of WT .....

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Bs. The Hon ble ITAT considered the same issue for A.Y. 95-96 and in its order dated 30.6.003, held that inter-divisional transfers cannot be treated as sales and to that extent the sales figures would have to be reduced correspondingly the expenses of manufacturing division would also have to be reduced to the cost of number of WTGs capitalized in that year. 6.4 However, the CIT has not accepted the consequential order of the AO and he invoked the jurisdiction u/s.263 of the Act. Vide order dat .....

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he State Electricity Board and we direct accordingly. Likewise, in respect of other fixed assets also, which are owned by the assessee for which information is available, the AO has to examine and allow depreciation. A plain reading of the above observations make it clear that the Tribunal was only concerned with the question of allowance of depreciation on windmills that were transferred to other units and which were commissioned. The Tribunal in the above part of the order has directed the AO .....

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reover, the ITAT has also not referred to the orders of subsequent years for allowing the relief to the assessee. It is therefore crystal clear that the AO while giving effect to the directions of the ITAT has erroneously allowed the deduction in respect of inter divisional sales of windmills. Had this deduction in respect of inter divisional sales not been given, the resultant total income would have been a positive figure as against the loss determined in the order dated 27.3.06. It is axiomat .....

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in accordance with the directions. 6.5 The assessee went in appeal before the Tribunal in ITA No.1041/Mds/2008 dated 19.6.2009 and the observation of the Tribunal is reproduced in para 4.1 of this order. 6.6 The AO once again passed consequential order dated 29.12.2010, wherein the AO observed as under: Based on the above evidences and findings the undersigned to reduce the profit element of 6 internally transferred WTGs only from the total income. Further, during this set aside assessment proce .....

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ous year relevant to the assessment year 1994-95. In the same submission dated NIL the assessee s authorized representative had further submitted that the cost of 53 WTGs (i.e. 59-6) had to be reduced from the total income of the assessee company. In this regard, it is better to draw our attention to page no.13 (para 9.11) and 19 of the original scrutiny assessment order u/s.143(3) dated 27/03/1997 wherein the profit element on these 53 not manufactured WTGs amounting to Rs. 1,98,62,236/- is alr .....

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s taxable income. The same position was incorporated in the subsequent orders. In view of this, the undersigned concludes that once again there is no need of reducing the cost of these 53 not manufactured WTGs from assessee s total income for AY 1994-95. 6.7 Once again, the assessee aggrieved by the above order of the AO, filed the appeal before the CIT(Appeals). Vide order dated 27.7.2011, the CIT(Appeals) by giving the following observation, decided the issue in favour of the assessee: 5.3 I .....

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.3.2005 for the assessment year 1994-95. The appellant relied on nara 26 of the order dated 13.12.2003 of Hon'ble ITAT in respect of assessment year 1997-98, the background of which the Hon'ble ITAT has given the finding is on account of addition made for inflation of purchases. The Hon'ble ITAT commented that the addition for inflation on purchases was made on a very crude way of working for the assessment year 1997- 98. Hence, the Hon'ble ITAT opined that the cost of manufactur .....

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and hence it is deleted". The observations of the Hon'ble ITAT in my opinion, has no bearing on the determination of the cost of WTGs for the assessment year 1994-95. In the original assessment order for the assessment year 1994-95, the Assessing Officer arrived at cost of each WTG basing on the enquiries made with other manufacturers of the same product. Regarding the selling price of each WTG, the Assessing Officer relied on the value of WTG sold to TNPL during the previous year by t .....

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1997-98 to which reference is made above. The Assessing Officer will carry out the same exercise in respect of present assessment year also. 5.6 Respectfully following the directions of Hon'ble Hon'ble ITAT, the Assessing Officer has to work out the cost of WTGs taking the raw materials as per the schedule adding the manufacturing expenses and restricting the work in progress. The Assessing Officer may examine the working of the cost of WTGs in the Assessing Officer order dated 31.5.200 .....

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.86 Cost of WTGs: (as worked out in order dt. 312.05.2007 giving Effect to order of ITAT dt. 27.03.2006) Raw materials as per Schedule 11 Add: Manufacturing expenses 10566.29 880.13 Total 11446.42 Less : Work in progress 500.01 Cost of WTGs. 10946.41 Cost of 1 WTG (10946.41/209)(based on the Assumption that the total cost is for manu- 52.38 Facturing of 209 WTGs which is not agreeable To assessee Cost of 53 WTGs (52.38 * 53) 2776.14 Profit element on 53 WTGs not produced And installed (3497.88 - .....

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by the Hon ble ITAT in its order dated 19.6.2009 referring to the order dated 13.12.2003 in the case of the assessee for the assessment year 1997-98. These grounds of appeal are partly allowed. 6.8. The AO passed consequential order to the order of the CIT(Appeals) and he observed vide order dated 20.9.2011 as follows : The cost of WTG s are being worked out by taking the raw materials as per the Schedule of Profit and loss account, adding the manufacturing expenses and restricting the work in .....

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e assessee had not contested that only 156 WTG s were manufactured. Out of 156 WTG s only 6 were transferred to its own power division. Based on directions of ITAT th profit element and depreciation on account of 6 WTGs internally transferred could be worked out…. And the AO computed the total cost for manufacturing at ₹ 1,09,46,41,000/- and he apportioned the same among 156 WTGs on each at cost of Rs. 70.169 lakhs. Once again, regarding wrong computation of depreciation, the assess .....

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dated 30.06.2003 and Para 26 of order dated 13.12.2003 has to be followed by the Assessing Officer. The Assessing Officer was specifically directed in the appellate order to find out the profit element on 53 WTGs not manufactured and installed and also to find out the Cost of 6 WTGs internally transferred and to find out the depreciation on them. The depreciation on account of 6 WTGs internally transferred has to be worked out by the Assessing Officer on the cost which should be capitalized as p .....

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fficer. The Assessing Officer is directed to look into the details in the original assessment order dated 27.3.1997 where a breakup of the total sales between those manufactured and then not manufacture and those internally transferred have been elaborated. The selling price per WTG out of 53 internally transferred has been discussed by the Assessing Officer in his order dated 27.3.1997. The Assessing Officer is directed to follow the directions as given in Para 5.5 and 5.6 of the appellate orde .....

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IT(Appeals). The CIT(Appeals) considered the order of the A.O. dated 18.3.2013. 7. From the above facts, there is a clear cut finding by the Tribunal in the order dated 9.3.2005 in ITA No.1403/Mds/98 for the assessment year 94-95 directed the AO, to follow the order of the Tribunal in earlier years i.e. ITA Nos.1666/Mds/2000 & others dated 30.6.2003 as reproduced in earlier para and this was confirmed by the Tribunal on various occasions. Specifically for the assessment year 1994-95 when the .....

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on of depreciation to the file of the AO or CIT(Appeals), they are duty bound to pass orders giving effect to the order of the Tribunal. The findings of the Tribunal extracted above are unambiguously clear and categorical in as much as it is specifically directed that manufacturing cost to be considered at 156 WTGs only and there is no dispute that the assessee has manufactured only 156 WTGs and out of this, the assessee sold 150 WTGs to the outsiders and six were transferred to assessee s own d .....

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nsequentially total expenditure have to be apportioned between 156 WTGs. In other words, the sales as well as cost incurred on 156 WTGs to be considered and this is the finding of the Tribunal in ITA No.1666/Mds/2000 & others dated 30.6.2003. The same view was followed in subsequent orders of the Tribunal for the assessment year 1994-95 in ITA No.1403/Mds/98 dated 9.3.2005 and the same view was taken by the Tribunal while deciding the appeal against u/s.263 order passed by the CIT for the as .....

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er was shown on sale price. The Tribunal required the AO to re-examine the matter. In other words, it was held by the Tribunal that inter-divisional transfer does not result in a sale and the assessee cannot be said to have earned any profit and therefore, directed to reduce the profit and corresponding cost thereon. 7.1 Now, coming to the recomputation of the AO by apportioning total cost of manufacture between 209 WTG, since there is a finding of the Tribunal in earlier orders that the assesse .....

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n our opinion, the lower authorities have not understood these orders of the Tribunal in true perspective and the same has been too widely interpreted. There appears misconceptions about the nature and binding effect of the order of the Tribunal. It is appropriate to point out that the lower authorities are bound to follow the order of the Tribunal. These Tribunal orders were accepted by the department and no further appeals were filed as per records brought before us. Hence, it is to be followe .....

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und to follow the decisions of the Supreme Court. 10. Though there is no provision like Article 141 which specifically lays downs the binding nature of the decisions of the High Courts, it is a well accepted legal position that a single judge of a High Court is ordinarily bound to accept as correct judgments of courts of co-ordinate jurisdiction and of the Division Benches and of the Full Benches of his court and of the Supreme Court. Equally well settled is the position that when a Division Ben .....

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hile Travancore High Court can be made a binding precedent on the Madras High Court on the basis of the principle of stare decisis, clearlyheld that such a decision can at best have persuasive effect and not the force of binding precedent on the Madras High Court. Referring to the States Reorganisation Act, it was observed that there was nothing in the said Act or any other law which exalts the ratio of those decisions to the status of a binding law nor could the ratio decidendi of those decisio .....

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the Tribunals subject to its supervision would confirm to the law laid down by it. It is in that view of the matter that the Supreme Court in East India Commercial Co. Ltd. v. Collector of Customs (AIR 1962(SC) 1893 (at p. 1905) : "We, therefore, hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and they cannot ignore it…….." 13. This position has been very aptly summed up by the Supreme Court in .....

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her Division Bench, and holding the view that the earlier decision is wrong, itself gives effect to that view, the result would be utter confusion. The position would be equally bad where a judge sitting singly in the High Court is of opinion that the previous decision of another single judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench." 14. The above decision was followed by the Supreme Court in Baradakanta Mishra v. Bhimsen .....

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subordinate courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunal subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer. 15. Having decided whose decision binds whom, we may next examine what is binding. It is well settled that it is only the ratio decidend .....

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ts are not to be construed as statutes (see Amar Nath Om Parkash v. State of Punjab (1985) 1 SCC 345). While following precedents, the court should keep in mind the following observations in Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai (AIR 1976 SC 1455 ) (at p.1467-68) : "It is trite, going by Anglophonic principles, that a ruling of a superior court is binding law. It is not of scriptural sanctity butis of ratio-wise luminosity within the edifice of facts where the judicial lamp plays th .....

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s and subsilentio determinations must be judiciously read by courts of coordinate jurisdiction." 16. Decision on a point not necessary for the purpose of the decision or which does not fall to be determined in that decision becomes an obiter dictum. So also, opinions on questions which are not necessary for determining or resolving the actual controversy arising in the case partake of the character of obiter. Obiter observations, as said by Bhagwati J. (as his Lordship then was) in Addl. Di .....

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purpose of disposing of the particular case. This position has been made further clear by the Supreme Court in a recent decision in CIT v. Sun Engineering Works P. Ltd. (1992) 198 ITR 297, at page 320, where it was observed : "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this court. The judgment must be read as .....

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ation by this court, to support their reasoning." 17. In the above decision, the Supreme Court, also quoted with approval, the following note of caution given by it earlier in (AIR 1971 SC 530) (At 578) : "It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment." It is thus clear that .....

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ding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows : (i) .....

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nstitute a larger Bench to examine the question (see Food Corporation of India v. Yadav Engineer and Contractor(AIR 1982 SC 1302). (ii) A Division Bench of a High Court should follow the decision of another Division Bench of equal strength or a Full Bench of the same High Court. If one Division Bench differs from another Division Bench of the same High Court, it should refer the case to a larger Bench. (iii) Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later d .....

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have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Tribunal within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on .....

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of the foregoing discussion, the decision of the Tribunal is binding on the Assessing Officer and he cannot pick up a word or sentence from the order of the Tribunal de hors the context of the question under consideration and construe it to be complete law declared by the Tribunal. A judgment must be read as a whole. Being so, the Assessing Officer cannot sit in judgment over the order of the Tribunal, and he is required to give just effect to the order of the Tribunal. If he has any grievance, .....

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ot be substituted by the decisions of the lower authorities. Judicial discipline requires that there cannot be any amount of disregard to the superior authority in the hierarchy by the Assessing Officer. When once the Tribunal decides an issue in one way, the only course available to the Assessing Officer is to follow the order of the Tribunal in true spirits, and it is not permissible for the Assessing Officer to take a different view, or to sit in judgment over the order of the Tribunal by int .....

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nting out that once the Assistant Collector has passed an order and it is confirmed by the Collector (Appeals) and no appeal is filed against the order of the Collector (Appeals), the order attains finality. Therefore, the Department was bound to follow the Assistant Collector's order of 17/4/1989 as confirmed by the Collector (Appeals)' order dated 28-8-1991 and finalise all the pending matters in the light of these orders. These will include cases in which the assessment was made provi .....

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trite that when a statute requires an act to be done in a specific manner, it has to be done in that manner only. The Assessing Officer could not expect it being done in some other manner. It is also trite principle of law that if a particular authority has been designated to do particular act, just it is that authority alone would could apply his/her independent mind to discharge his duties and further, a lower authority cannot sit in judgment over the decision of a superior forum. Being so, in .....

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idering that the assessee has manufactured 156 WTGs and remitted back to the file of the AO again and again for reconsideration. If the AO has not properly understood the directions of the Tribunal, he can approach the Tribunal by filing a Misc. Application or if he did not agree with the finding of the Tribunal, he can explore and pursue the remedy available under the law, otherwise, he is duty bound to pass consequential orders in conformity with the finding of the Tribunal cited supra and he .....

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he decisions of the High Court unless, on an appeal to the Supreme Court, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decisions of the High Court or to refuse to follow the decisions of the High Court on the pretext that an appeal has been filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the Tribunal refuses to follow any decision of the High Court on the abov .....

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6 WTGs at applicable rate which were inter-divisional transfers. This ground is allowed. 25. Regarding the issue of levy of interest u/s.220(2) of the Act, the ld. AR submitted that the AO erred in reckoning the due date for payment of tax as on 1.5.1997 as against the demand as per the fresh assessment order was raised only on 28.12.2010, which would only be the due date for charging interest u/s.220(2) of the Act. Accordingly, he pleaded for determination of the reckoning of the starting point .....

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ther hand, the ld. DR submitted that the assessee s reliance on CBDT Circular No.334 dated 3.4.1982 is misplaced, since the order of the AO was not set aside by any appellate authority till date. In fact, para 2(ii) of the said Circular is applicable, since the demand created in the original assessment order stands partly upheld by appellate authorities which culminated in the impugned order of the A.O. Further, he relied on the judgment of the Delhi High Court in the case of Girnar Investment L .....

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t was restored by the order of ITAT - The effect of the order of Tribunal is that the earlier notice of demand stood revived and became legal, valid and enforceable - in view of sec.3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, the original notice of demand continued to be valid and operative - In the absence of payment of entire demand, interest u/s.220(2) to be levied from the date of original order. In view of the above, the ld. DR submitted that the .....

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st chargeable under section 220(2) of the IT Act, when the original assessment order passed by the Income-tax Officer is- (i) cancelled by him under section 146 of the IT Act; (ii) set aside/cancelled by an appellate/revisional authority and such appellate/revisional order has become final ; or (iii) set aside by one appellate authority but, on further appeal, the order setting aside the assessment is varied by the second appellate authority and the demand gets finally determined. 2. These issue .....

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assessment is reframed, interest can be charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order. (ii). Where the assessment made originally by the Income-tax Officer is either varied or even set aside by one appellate authority but on further appeal, the original order of the Income-tax Officer is restored either in part or wholly, the interest payable under section 220(2) will be computed with reference to the due date reckoned .....

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mes applicable only in the event when the original assessment order is varied or set aside by one appellate authority and on further appeal, the original order of the AO is restored either wholly or in part. In the present case, it is shown that the original assessment order was not all restored by the Tribunal in ITA No.1041/Mds/2008 dated 19.6.2009 and the consequential order was passed by the A.O. on 28.12.10 and this is the assessment order passed consequent to the order of the Tribunal. Bei .....

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e case of CIT v. Samurai Software (P) Ltd. (supra), wherein it was held as under : Once the assessment order is set aside in appeal and subsequently affirmed, interest cannot be levied under s.220(2) till demand is raised afresh 28.1 Further, in the case of CIT v. Rajesh Kumar Dinesh Kumar (supra), the Rajasthan High Court has held that : Sub-para(ii) of para 2 of Circular No.334 dr. 3rd April, 1982 becomes applicable only in the eventuality, where the original assessment order is varied, or set .....

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passed. In that event, the matter is squarely covered by the later part of sub-para(i) of the circular, which comprehends a situation, where even when the assessment is reframed pursuant to setting aside of the order by the appellate Court.- Vikrant Tyres Ltd. v. ITO(2001) 166 CTR (SC)1 : (2001) 247 ITR 821 (SC) 2001) 3 SCC 76 applied. 28.2 It is also pertinent to note that in the case of CIT v. Chika Overseas (P) Ltd. (66 DTR 398), the Bombay High Court held as follows : The original assessment .....

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as stipulated under s.220(1), the assessee was liable to pay interest under s.220(2). If the liability to pay interest under s.220(2) arises after thirty days of the service of the demand notice dt. 24th Dec.,2006, the question of demanding interest for the period prior to 24th Dec.,2006 does not arise at all. Neither the assessment order dt. 24th Dec.,2006 nor the demand notice dt. 24th Dec.,2006 required the assessee to pay interest after thirty days from the date of service of the original d .....

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of the Tribunal in holding that the assessee is liable to pay interest under s.220(2) from the end of the period mentioned in s.220(1) i.e. thirty days after the service of notice of demand dt. 24th Dec.,2006 till the date on which the amount demanded was paid cannot be faulted. 28.3 The judgment of the jurisdictional High Court relied on by the ld. DR in the case of Super Spinning Mills v. CIT (244 ITR 814) cannot be applied, wherein it was held that though the CIT(Appeals) allowed the appeal, .....

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to the assessee, which is directed by any of the appellate authorities in the interregnum has no effect on the liability of the assessee to pay the interest. 28.4 However, there is a contradictory judgment by the Delhi High Court in the case of Bharat Commerce & Industries Ltd. v. CIT(210 ITR 13), wherein it was held that demand consequent upon the rectification order, interest u/s.220(2) cannot reckon the AO back the date of original assessment. 28.5 The jurisdictional High Court in the cas .....

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ential order was made itself became final, that order not having been challenged and carried up in further appeal, the rectifications made to that order eight years later on 30th March, 1988, cannot be regarded as having revived a dead notice to the extent of the amount determined as the tax payable. The amount determined by that order as the tax payable was straightaway adjusted even at the time of the assessment of the surtax refund due for the asst. yr. 1975-76. No question of nonpayment of a .....

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t made by the Revenue of the amount determined by it as interest by invoking s.220 from the refund that was due to the assessee at that time cannot be regarded as lawful. There was no question of any revival of a demand as the order made by the AO on 16th April, 1980, giving effect to the order in appeal was not required to be altered by reason of any further challenge to the appellate order. That appellate order itself has become final. Sec.3 of the Validation Act, therefore would not help to r .....

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of interest under section 220(2) of the Act. We find that the issue is also adjudicated in assessee's own case in ITA No.1870/Mds./12 decided on 20.02.13, the relevant extract of the order of the Tribunal dealing with this issue is reproduced herein below: 12. The next issue raised by the assessee is with regard to levy of interest under section 220(2) of the Act. The Assessing Officer vide assessment order dated 21.12.2011 has levied interest under section 220(2) for the period of 35 month .....

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erest under section 220(2) cannot be a subject matter of appeal as the same is not appellable. To support his contentions the DR has relied on the judgement of the Hon ble jurisdictional High Court in the case of CIT Vs. Suresh Gokuldas (supra) . 14. A perusal of the aforesaid judgement would show that the Hon ble High Court has held that the assessee was asked to pay interest under section 220(2) of the Act by demand notice issued under section 156. Notice of demand issued under section 156 can .....

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present case. In the present case, the Assessing Officer has specifically mentioned in the assessment order passed under section 143(3) read with section 254 of the Act about the levy of interest under section 220(2). There is no bar for assailing any issue which is part of the assessment order. Therefore, the contention of the DR that interest levied u/s.220(2) is not appellable in the present case is not tenable. 15. Moreover, in Circular No.334 dated 3.4.1982 the Department has clarified that .....

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