TMI Blog2023 (7) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroversy in question and the decision or conclusion arrived at. In the circumstances, on this issue we direct that the matter be sent to the Interim Board for Settlement constituted for the settlement of pending applications as contemplated under Section 245 AA of the Act. The Interim Board may pass such orders as it deems fit in accordance with law after hearing the parties. - K.R. SHRIRAM FIRDOSH P. POONIWALLA, JJ. For the Petitioner : Mr. Nishant Thakkar a/w Mr. Rajesh Poojary and Ms. Jasmin Amalsadvala i/b Mulla Mulla and Craigie Blunt Caroe. For the Respondents : Mr. Suresh Kumar. ORAL JUDGMENT : (PER : K.R. SHRIRAM, J.) 1. Petitioner, a bank in the private sector filed its return of income for Assessment Year 1997-98 on 1st December 1997. In the computation, petitioner returned income of Rs. 12,73,80,111/- being interest accrued as due on Government securities and debentures held by petitioner as on 31st March 1997. 2. By an order dated 28th March 2000 2nd Respondent (ACIT) completed the Assessment for Assessment Year 1997-98. In the Assessment Order among other adjustments, the 2nd Respondent held that a sum of Rs. 25,17,19,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Hon ble Court be pleased to issue a Writ of Mandamus or any other writ order or direction under Article 226 of the Constitution of India ordering and directing the 2nd Respondent to assess interest income on Government Securities as returned by the Petitioner; (c) That this Hon ble Court be pleased to issue a Writ of Prohibition or any other writ order or direction under Article 226 of the Constitution of India ordering and directing the 2nd Respondent from taking any action in furtherance to the Impugned Order (Exhibit I hereto) insofar as it relates to the additions/ adjustments to Interest Income. (d) That the hearing and final disposal of this petition (i) the operation of the Impugned Order insofar as it relates to the additions/adjustments to Interest Income be stayed; and (ii) the 2nd Respondent, her successors in office, subordinates, servants and agents be restrained by an order and injunction of this Hon ble Court from taking any steps to recover Rs. 16,83,56,055/- being the demand raised pursuant to the Impugned Order insofar as it pertains to additions/adjustments to Interest Income. (e) for ad-interim reliefs in terms of prayers (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est was not payable on any date other than that mentioned in the security. (g) The ITAT, in the case of petitioner s own case, for subsequent Assessment Years from 1998-99 onwards, has accepted the position that the interest accrues only on the specified open dates and not on day to day basis and the assessee cannot be prevented from urging in the returns that the interest in the Government securities accrued only on the specified open dates notwithstanding that credit has been taken in the Profit and Loss Account for the interest on day to day basis. 7. Per contra, it was the case of respondents that as the applicant was following mercantile system of accounting for interest paid on securities and deposits it could not follow the cash system of accounting for corresponding income. 8. Mr. Suresh Kumar submitted that there was nothing wrong in the procedure followed by the Commission and therefore the court should not interfere. Mr. Suresh Kumar also submitted that the conclusion arrived at by the Commission was a well reasoned conclusion and the assessee cannot pick and choose what is convenient to him and discard what is not convenient to him. Mr. Suresh Kumar submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement/ instrument for payment of interest. The court went on to hold that if the assessee held the security upto 31st March and sold the same thereafter, but before the date on which interest was payable as stipulated in the security, interest cannot be said to have accrued to the assessee. 13. The Commission has not articulated as to why it did not agree with the submissions made by the assessee s representative. The assessee s representative admittedly had also relied upon the judgment in E.D. Sassoon Co. Ltd. Ors. vs. CIT (1954) 26 ITR 27 (SC) where the Hon ble Apex Court held Unless and until the assessee acquires a right to receive income, the income cannot be said to have been accrued to him . Following this judgment of the Hon ble Apex Court, the ITAT, Jaipur Bench in State Bank of Bikaner Jaipur vs. Deputy Commissioner of Income Tax 74 ITD 203 (Jaipur) held that in the case of interest on securities, the income fructifies to the assessee only when the securities yield interest . The ITAT had also relied upon CIT vs. Shoorji Vallabhdas Co. (1962) 46 ITR 144 (SC) where the Hon ble Apex Court has held that if income does not result at all, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a mistake apparent from the record ? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a mistake apparent from the record which could be rectified under Section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd. s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectification, it could be said to be mistake apparent from the record under Section 254(2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well-settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a new rule but to maintain and expound the old one . In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enable to further avenue of challenge. The absence of reasons has rendered the [High Court's judgment] not sustainable. . 6. Even in respect of administrative orders Lord Denning M.R. in Breen v. Amalgamated Engg. Union observed: (WLR p. 750 G) The giving of reasons is one of the fundamentals of good administration . In Alexander Machinery (Dudley) Ltd. v. Crabtree it was observed: Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at . Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the inscrutable face of the sphinx , it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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