TMI Blog1983 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... hat basis, he completed the assessment for the year 1963-64. Against that part of the order of the ITO that represented the sale of timber, the petitioner filed an appeal before the AAC, Mysore Range, Mysore (hereinafter referred to as " the AAC "), who by his order dated March 11, 1966, (exhibit " B "), dismissed the same and affirmed the order of the ITO. Against the said orders of the AAC and the ITO, the petitioner filed second appeal before the ITAT, Bangalore Bench (hereinafter referred to as " the Tribunal "), inter alia, contending that the aforesaid sum of Rs. 11,91,508 was a capital receipt and was, therefore, not chargeable to income-tax under the Act. In the said appeal before the Tribunal, the Revenue alternatively urged that the said amount was a capital gain and should be so assessed under the Act. On an examination of these and other contentions urged before it, the Tribunal by its order dated March 20, 1971, (exhibit "C"), allowed the appeal filed by the petitioner, inter alia, holding that the receipt was a capital receipt and was not chargeable to income-tax under the Act. But on the alternative plea urged for the Revenue, the Tribunal held that in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains. In the instant case, the sale of timber was mostly from coffee estates owned by the assessee and whether such sales would attract capital gains under the Act is also a debatable question. In order that the Tribunal may remand a matter, there must be some material to prima facie hold that the contention put forth is part of the subject-matter of appeal and requires further investigation in regard to detail s or otherwise. On the material on record, it is clear that the Tribunal has exercised its discretion in accordance with the principles laid down by the Supreme Court and it cannot be said that the discretion has been improperly exercised. Accordingly, we answer the question as reframed in the affirmative and against the Department. The order made by this court in the reference has become final as the Supreme Court has declined to grant special leave to appeal to the Revenue. For the subsequent assessment years 1964-65, 1965-66 and 1966-67, the ITO took the same view he had taken on the sale of timber for the year 1963-64. On appeals filed by the petitioner, the AAC took the view that the receipts were capital receipts. But in the second appeals filed by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agwan Das [1964] 52 ITR 335, that had not interpreted the said section does not bear on the point. Under the earlier I.T. Act of 1922 (hereinafter referred to as "the 1922 Act "), as also under the present Act, every assessment year is treated as separate and distinct period or unit. In CIT v. Chitnavis [1932] LR 59 IA 290 ; 2 Comp Cas 464, the judicial Committee of the Privy Council expressed on that question in these words (at p. 470 of 2 Comp Cas): " For the purpose of computing yearly profits and gains, each year is a separate self-contained period of time, in regard to which profits earned or losses sustained before its commencement are irrelevant." In Kikabhai Premchand v. CIT [1953] 24 ITR 506; [1954] SCR 219, our Supreme Court, expressing its concurrence with the above statement of law enunciated by the Privy Council, has expressed thus (p. 508): " ...... for income-tax purposes, each year is a self-contained accounting period and we can only take into consideration income, profits and gains made in that year and are not concerned with potential profits which may be made in another year any more than we are with losses which may occur in the future." In Murlidhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the year 1963-64, the provisions of s. 150(1) would nevertheless be attracted as the wordings of s. 150(1) are 'to give effect to any finding or direction contained in an order, passed by any authority in any proceedings under this Act by way of appeal, reference or revision.' This test is satisfied as the order of the Tribunal in ITA Nos. 668, 669 and 670 (Bang)/1971-72 dated 1-1-1973 for the asst. years 1964-65 to 1966-67 is an order passed under the I.T. Act, 1961, and it is by way of appeal and there is a finding that the sale proceeds of timber are not liable to tax as revenue receipt but capital gains will arise on the sale of timber. 4. As regards the time-limit mentioned in s. 150(2), it is seen that the Asst. orders for 1964-65 to 1966-67 were passed on 30-1-1965, 17-3-1966 and 30-11-1966 respectively, well before 31-3-1968, by which date action under s. 147(b) for the asst. year 1963-64 could have been initiated. 5. Hence, as a consequence of information in my possession, viz., the finding given by the ITAT, Bangalore Bench, in orders in ITA Nos. 668, 669 and 670 (Bang)/1971-72 dated 1-1-1973, and on the basis of facts discussed above in detail, I have reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/courts under the Act or the Constitution and thus bring the assessments for the year or years, as the case may be, in conformity with those orders without any time-limit. In a case covered by s. 150(1) of the Act, the question of limitation applicable to reopening of assessment or escaped assessment does not apply. The words " in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision must necessarily relate to an order made with reference to a particular assessment year or years and that must necessarily be by a superior authority or court competent to make the same. The words " any proceeding under this Act by way of appeal, reference or revision " cannot be read as to give effect to an order made in any case and for any period and of any person. In the scheme and context, these words should be so construed as referable to an order made for a particular year or years of that particular assessee and not of others. The construction suggested by Sri Srinivasan on s. 150(1) as refering to any order on appeal, revision or reference under the Act is too literal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ban cannot be so construed as to increase the jurisdiction of the Tribunals under the relevant section. The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing Tribunal within the scope of its jurisdiction. " On the meaning of the term " finding"," direction " or " order ", the majority expressed thus (p. 345) : " A `finding', therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The AAC may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression 'direction' cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. Under that section, he can give directions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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