TMI Blog2005 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... . DAGA., A. S. AGUIAR. JUDGMENT The judgment of the court was delivered by V.C. Daga J.-By this reference under section 256(1) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal has referred the following questions of law for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the Commissioner of Income-tax (Appeals) expressly or impliedly applied his mind on the issue of the allowance of relief under section 35B on reassortment charges when the claim for deduction on this account had already been allowed by the Income-tax Officer in the assessment order and consequently did not figure in the appeal before the Commissioner of Income-tax (Appeals)? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that after an appeal was decided by the Commissioner of Income-tax (Appeals) against the assessment order, the assessment order merged in the order of the Commissioner of Income-tax (Appeals) and thereafter the Commissioner of Income-tax could not exercise his jurisdiction under section 263 of the Income-tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 35B. The Tribunal, further held that the assessment order passed by the Income-tax Officer merged in the order of the Commissioner of Income-tax (Appeals) and, therefore, the Commissioner of Income-tax could not have assumed jurisdiction under section 263 of the Income-tax Act so as to revise the assessment order, on the ground of it being erroneous and prejudicial to the interests of the Revenue. The Appellate Tribunal, on the above findings, cancelled the order of the Commissioner under section 263 and allowed the appeal of the assessee-firm. Based on the above facts, the questions of law as extracted in the opening part of this order are the subject-matter of this reference made under section 256(1) at the instance of the Revenue for the opinion of this court. Submissions: Learned counsel appearing for the Revenue, Shri Kotangale, submitted that the assessee could not have preferred appeal against that part of the order which was in favour of the assessee. The assessee could not be said to be aggrieved by that part of the order which was in favour of the assessee. In other words, he submits that weighted deduction which was allowed on Rs. 5,63,350 could not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1989, with retrospective effect from 1st June, 1988. The relevant part of the amendment reads as under: "Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- ... (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the 1st day of June 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal." This court while dealing with the scope of amendment to section 263, in Ritz Ltd. v. Union of India [1990] 184 ITR 599, 603 ruled that only in cases where action under section 263 is taken on or after June 1, 1988, the merger of the assessment order in the appellate order will be treated as confined to the issues actually considered and decided in appeal in terms of clause (c) of the newly substituted (with effect from June 1, 1988) Explanation to section 263(1). In that view of the matter, where the action under section 263 is taken prior to June 1,1988, the provisions of said clause (c) of the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has been amended so as to clarify that the provisions of the Explanation shall be deemed to have always been in existence." In the case of CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50 the apex court also had an occasion to consider the above issue. The relevant facts reveal that the assessment year in that case was 1975-76 ending on December 31, 1974. The assessment was completed under section 143(3) read with section 144B, on March 31, 1978, in which the net business loss was computed at Rs. 3,61,086 and the income under the head "Capital gains" at Rs. 38,874. The Income-tax Officer had made certain additions and disallowances while computing the loss and income as above and had also accepted, inter alia, the following three claims: (i) Deduction of a sum of Rs. 23,82,621 by way of provision for gratuity; (ii) Depreciation on Rs. 4,21,000 which was paid by the assessee to United Textile Industries as consideration for transfer of installed property of 17,480 spindles and 400 looms of Old Manek Chowk Mills; (iii) Loss on account of difference in exchange rate which was referable to the purchase of machinery, etc. as revenue expenditure. For the purposes of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares or decides by express enunciation but also what follows from such declaration by clear implication by way of logical deduction. So far as the case of Shri Arbuda Mills Ltd. [1998] 231 ITR 50 (SC), is concerned, the pronouncement is clear on a point and suffers from no ambiguity. Needless to mention that once the point is finally decided by the Supreme Court it becomes a binding precedent. The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided. Merely because, there is no discussion in the judgment that does not mean that the issue in question was not considered by the apex court and that it has no binding force. On the contrary, earlier views of this court referred to in para. 13 have lost their binding force. They are no longer good law. The consequence of the aforesaid clause (c) introduced with retrospective effect, is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matter as had not been considered and decided in the order passed in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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