C.I.T. vs. M/S KANSARA MODLER LTD.

(1) D.B. INCOME TAX APPEAL NO. 23/2007. Commissioner of Income Tax-I Vs. M/s Kansara Modler Ltd. .. (2) D.B. INCOME TAX APPEAL NO. 129/2007. Commissioner of Income Tax-I Vs. M/s Kansara Modler Ltd. ...

Date of Judgment :: 20th September 2011. HON'BLE MR. JUSTICE DINESH MAHESHWARI HON'BLE MR. JUSTICE KAILASH CHANDRA JOSHI Mr. K.K. Bissa, for the appellant. Mr. Anjay Kothari, for the respondent. <><> BY THE COURT: These two income-tax appeals under Section 260-A of the Income Tax, 1961 preferred by the Revenue against the different orders passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur for different assessment years but in relation to the same assessee and involving identical questions of law, have been considered together; and are taken up for disposal by this common judgment. These appeals were admitted on the following identical questions of law:- “(1) Whether on the facts and in the circumstances of the case, the learned tribunal was legally justified in holding that the receipts in question by way of interest were incidental to the main business of the assessee and the receipts are to be taken as capital receipts and not income of the assessee from any independent source despite assessee’s failure to adduce any evidence in this regard? (2) Whether on the facts and in the circumstances of the case, the learned tribunal was legally justified in not applying the decision of Hon’ble Supreme Court given in the case of Tuticorin Alkali Chemical and Fertilizers Ltd. v. CIT reported in 227 ITR 172 despite the same being fully applicable to the facts of the present case?” 1

The learned counsel for the parties have frankly pointed out that in relation to the same assessee, the above questions had been the subject of consideration in D.B. Income Tax Appeal No. 79/2005, decided on 25.04.2008; and have placed for perusal the copy of the said judgment dated 25.04.2008. In the said judgment dated 25.04.2008, a co-ordinate Bench of this Court has taken note of the ratio in the case of Tuticorin Alkali Chemical and Fertilizers Ltd. Vs. CIT: [(1997) 227 ITR 172 (SC)] and also in the cases of CIT Vs. Karnal Co-operative Sugar Mills Ltd.: [(2000) 243 ITR 2 (SC)] and CIT Vs. Bokaro Steel Ltd.: [(1999) 236 ITR 315 (SC)] and has observed that when the Tribunal found Karnal Co-operative Sugar Mills Ltd.’s case to be the nearest and latest and applicable on facts, it cannot be said that the Tribunal was wholly wrong in adopting this course or was legally not justified in doing so simply because it might have been possible, or might be more appropriate to follow the other set of judgments by following the other line of reasoning. The Court, however, made it clear that it was not being decided as to whether in such circumstances, the questioned receipts would be revenue receipts or capital asset. The relevant operative part of the judgment reads as under:- “13. In that view of the matter, what we are required to consider is, as to whether the Tribunal was legally justified in not applying the judgment rendered in Tuticorin's case (supra), or that, the Tribunal was justified in applying the judgments given in Bokaro Steel, and Karnal Cooperative Sugar Mill's case. If this question were to come originally before us, perhaps we might have taken a task of undertaking the exercise, as to which of the views is required to be followed, and may be, that we might have come to any conclusion, either ways. In such circumstances, when the learned Tribunal, after examining all the three judgments, in Tuticorin's case(supra), Karnal Cooperative Sugar Mill’s case (supra), and Bokaro Steel's case(supra), has examined the question, and found Karnal Cooperative’s case (supra) to be the nearest, and latest case, on facts, in our view, it cannot be said, that the Tribunal was wholly wrong in adopting this course. It would have been equally the same situation, if the learned 2

Tribunal would have adopted the other line of reasoning, following the judgment in Tuticorin's case (supra). 14. Therefore, when there are two sets of judgments of Hon'ble Supreme Court, proceeding on different lines of reasonings, and both stand on their own logical footing, and in that event, if the learned Tribunal has accepted one line of reasoning, supported by one set of judgments, it cannot be said, that the learned Tribunal was legally not justified in following the decision, as followed by it, simply because it might have been possible, or might be more appropriate to follow the other set of judgment, by following the other line of reasoning. 15. We may make it clear here, that we should not be understood to be deciding the question of law, as to whether, in such circumstances, the receipt would be revenue receipt or capital asset. In that view of the matter, the questions, as framed, are also decided in favour of the assessee, and against revenue, and the appeal is dismissed.” The decision rendered in the similar appeal involving identical questions, obviously, covers the questions formulated in the present appeals too and there appears no reason for taking any view different from the one taken by the co-ordinate Bench. Accordingly, and as a result of the aforesaid, the questions as formulated in the present appeals are answered against the Revenue and in favour of the assessee; and the appeals are dismissed following the said judgment dated 25.04.2008 in D.B. Income Tax Appeal No. 79/2005 and in the same terms. (KAILASH CHANDRA JOSHI), J. (DINESH MAHESHWARI), J. //Mohan// 3

D.B. INCOME TAX APPEAL NO. 129/2007. Commissioner of Income Tax-I Vs. M/s Kansara Modler Ltd. ...

Date of Judgment :: 20th September 2011. HON'BLE MR. JUSTICE DINESH MAHESHWARI HON'BLE MR. JUSTICE KAILASH CHANDRA JOSHI Mr. K.K. Bissa, for the appellant. Mr. Anjay Kothari, for the respondent. <><> The appeal is dismissed vide common judgment in D. B. Income Tax Appeal No. 23/2007: Commissioner of Income Tax-I Vs. M/s Kansara Modler Ltd. (KAILASH CHANDRA JOSHI), J. (DINESH MAHESHWARI), J. //Mohan// 4