ASSTT.C.I.T. vs. EMTICI ENGINEERING LTD

Facts

The assessee, EMTICI ENGINEERING LTD., filed its return of income for Assessment Year 1986-87 declaring a total income of Rs. 61,23,838. The Assessing Officer (AO) passed an order under Section 143(3) on March 21, 1989. The Commissioner of Income Tax (Appeals) partly allowed the assessee's appeal on July 7, 1989. Both the assessee and the Revenue appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT, by its order dated August 20, 1999, partly allowed the assessee's appeal and dismissed the Revenue's appeal. The Revenue has filed the present Tax Appeals challenging the ITAT's order. The High Court admitted the appeal on December 6, 2000, formulating a substantial question of law concerning the deletion of interest amounting to Rs. 3,06,207 attributable to investment in shares.

Held

The High Court held that the issue involved in the present appeals was already concluded by its earlier decision in Tax Appeal No. 255/2000, decided on November 17, 2014. In that earlier case, the High Court noted that the Commissioner of Income Tax (Appeals) had decided the issue in favour of the assessee by relying on orders passed in earlier years, which was concurred by the Appellate Tribunal. The High Court observed that the issue had not been carried in appeal before it in earlier years, and therefore, those orders had become final. Consequently, the High Court found no illegality with the judgment rendered by the Appellate Tribunal and concurred with its view. The appeal was accordingly dismissed. The issue was answered in favour of the assessee and against the Revenue. No elaborate reasons were given as the issue was considered concluded.

Key Issues

1. Whether the Appellate Tribunal was right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeal) deleting the interest of Rs. 3,06,207 attributable to investment in shares? The Revenue contended that the ITAT erred in confirming the deletion of interest. The assessee argued that the deletion was justified, relying on earlier years' orders which had become final as they were not carried further in appeal to the High Court. The judgment also refers to a previous Tax Appeal No. 255/2000, which involved a similar issue regarding notional interest attributable to investment in shares, where the High Court had dismissed the Revenue's appeal.