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TMI Blog2003 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, ITRs/IT appeals by the assessees and the Revenue on the same question. The Travancore Titanium Products Ltd. is involved in I.T.R. No. 20 of 1998, I.T.A. No. 13 of 2000, I.T.A. No. 84 of 2001, I. T. A. No. 151 of 2002 and I.T.A. No. 161 of 2002. The assessment years concerned are 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96, respectively. M/s. Kerala Agro Machinery Corporation Ltd. is involved in I.T.A. No. 70 of 2000 and the assessment year is 1991-92. The Travancore Cochin Chemicals Ltd. is involved in I.T.A. Nos. 39 and 77 of 2000, 166 of 2000 and 173 of 2001. The assessment years concerned are 1992-93, 1993-94, 1992-93 and 1994-95, respectively. The Kerala State Industrial Products Trading Corporation Ltd. is involved in I.T.R. No. 135 of 1999, I.T.A. Nos. 69 of 1999, 180 of 2000, 183 of 2000 and 143 of 2002. The assessment years concerned are 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96, respectively. I.T.R. No. 20 of 1998 is the leading case where the Travancore Titanium Products Ltd., Thiruvananthapuram, is involved. The Income-tax Appellate Tribunal, Cochin Bench, under section 256(1) of the Act has referred the following two questions of law for decision by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. In further appeal by the assessee, the Tribunal observed that the payment had been made pursuant to the order passed by the Government on December 7, 1991 and that the Government had spelt out the services rendered by it to the company and the service charges had been paid for the services actually rendered by the Government and so the payment was for the purpose of the business. The Tribunal also noted that such payments were allowed in the prior years also as business expenditure. The Department, being aggrieved by the order of the Tribunal, has sought reference of the first question specified above and the same was referred. It is interesting to note that though this order of the Tribunal rendered in the case of the Travancore Titanium Products Ltd., Thiruvananthapuram, was followed by subsequent Benches of the Tribunal in the case of the very same assessee and in respect of certain other assessees also another Bench of the Tribunal in the case of the assessee itself for the assessment years 1994-95 and 1995-96 has taken a different view. The Tribunal has noted that another Bench of the Tribunal in I.T.A. No. 894 (Coch.) of 1994 by order dated March 14, 1995, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in page 35 of the paper book, has held that the service charges paid by the assessee-companies to the Government is a permissible deduction. The said letter shows that the liability to pay service charges is a recurring liability of the assessee-companies based on Government orders. When the Tribunal has decided the issue based on the said Government letter, without anything more, it applies to subsequent years also and the Tribunal was not justified in distinguishing the earlier decision of the Tribunal stating that each year is independent and the service rendered in each year has to be independently considered. Probably the decision of the Tribunal rendered in the earlier case may be wrong; none the less a Bench of co-ordinate jurisdiction has ordinarily to follow it, unless it doubts the correctness of the said decision and refers the matter to the President of the Tribunal. Conflicting views have been expressed by different Benches of the Tribunal in the instant cases only because they did not choose to observe the settled procedure to be followed in such cases. The resultant position is that judicial propriety and discipline have not been followed by the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this approach of the latter Bench of the Tribunal in this case, a lot of valuable time of the court is wasted and the parties to this case have been put to considerable hardship." This was again reiterated by the Supreme Court in District Manager, APSRTC v. K. Sivaji [2001] 98 FJR 45; [2001] 2 SCC 135 by observing that judicial discipline required that the judge either follow the earlier decision or refer the matter to a larger Bench and that sitting singly the learned judge could not have taken a different view on the specious ground that the decision was based on facts. Again in Dr. Vijay Laxmi Sadho v. Jagdish [2001] 2 SCC 247 yet another three-judge Bench of the Supreme Court considered this question. It was observed as follows: "As the learned single judge was not in agreement with the view expressed in Devilal's case it would have been proper, to maintain judicial discipline, to refer the matter to a larger Bench rather than to take a different view. We note it with regret and distress that the said course was not followed. It is well-settled that if a Bench of co-ordinate jurisdiction disagrees with another Bench of co-ordinate jurisdiction whether on the basis of 'dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders, the earliest of which is G.O. (MS) No. 48/88/ID dated March 25, 1988, and from the communication it further appears that subsequent Government orders of February 2, 1989, January 5, 1990 and the Government letter No. 47291/H3/91/ID dated December 7, 1991, are all details of enhancement of the service charges initially provided. Excepting the fact that the Tribunal has considered only the content of the Government letter no effort has been made by the Tribunal to find out the basis on which service charges are levied which probably can be ascertained only from the earliest Government order dated March 25, 1988, and from the circumstances which led to the issue of the said Government order. We find from the first appellate authority's order that the said authority had considered the matter a little more elaborately, however, without proper reference to the various Government orders referred to in the letter dated June 21, 1994, extracted in the Tribunal's order. The Tribunal of course has referred to the legal principles in the matter of grant of deduction under section 37 of the Act particularly that laid down in Travancore Titanium Products Ltd. v. CIT [1966] 60 ITR 277 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government companies with which we are concerned in these cases certainly it is one of the relevant matters to be borne in mind while considering the question of deduction of the service charges paid by these companies to the Government. According to us, since what is demanded under the Government order is service charges certainly it is necessary to find out the services rendered by the Government to the assessee. Though the communication dated June 21, 1994, extracted in the Tribunal's orders refer to some of the services it does not disclose all the details and circumstances for the levy of the service charges. In fact the authorised representatives of the companies were making submissions based on their imagination and ingenuities without properly ascertaining as to what exactly are the services rendered by the Government. In these circumstances, we are of the view that these factual details with regard to the actual services rendered by the Government have to be considered for deciding the eligibility for deduction of the service charges. We are not saying that the service charges which are demanded in the Government orders cannot be allowed as a deduction under section 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench consisting of Sri K.P.T. Thangal and Sri M.M. Cheri an decided the issue relying on the decision of the Tribunal in I.T.A. No. 894/C of 1994 in the case of Travancore Titanium Products Ltd. (I.T.A. Nos. 39 of 2000, 77 of 2000 and 166 of 2000). However, another Bench of the Tribunal consisting of Sri K.P.T. Thangal and Dr. O.K Narayanan has taken a different view in the case of the very same assessee for the assessment year 1994-95. This is also after noting that the appeals filed for the earlier years were allowed by the Tribunal following the decision in I.T.A. No. 894/C of 1994. This also, according to us, was not the proper procedure to be adopted by the Tribunal. We find that the Tribunal in the case of Kerala State Industrial Products Trading Corporation Ltd., Trivandrum, which is the subject-matter of I.T.R. No. 135 of 1999, I.T.A. Nos. 69 of 1999, 180 of 2000 and 183 of 2000 and in I.T.A. No. 143 of 2002 though by different Benches have held that the assessee is not entitled to deduction of service charges paid to the Government distinguishing the decision of the Tribunal in I.T.A. No. 894/C of 1994, as according to them, no service whatsoever has been rendered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 894/C of 1994, we are of the view that the Assessing Officer must be directed to consider the matter afresh with reference to those Government orders and the circumstances under which those Government orders happened to be issued. In this view of the matter we set aside the orders of the Assessing Officer and the two appellate authorities on the question of deduction of service charges under section 37 of the Act in all these cases and remit the matter to the Assessing Officer for consideration in accordance with law and in the light of the observations made hereinabove and the assessees are directed to produce all relevant and supporting documents before the Assessing Officer. The Assessing Officer must necessarily peruse the earliest Government orders. In fact the assessee in I.T.A. No. 151 of 2002 has produced the relevant Government orders as annexures A and B series arising out of the order of the Tribunal in I.T.A. No. 63/C of 1998 for the assessment year 1994-95. Toe assessee will also obtain all the details and documents leading to the issue of the Government order dated March 25, 1988, from the Government and make it available before the Assessing Officer. It is open to ..... 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