Decided on November 04,1982



T.D. Sugla, President - (1.) THE assessee is a non-resident foreign company. THE proceedings relate to its assessment for the assessment year 1977-78 for which the previous year is calendar year 1976. THE main source of income for the year is by way of dividend on its shares held in an Indian company styled Nirlon Synthetic Fibres & Chemicals Ltd. As against the gross amount of dividend of Rs. 13,11,200, the assessee offered a sum of Rs. 11,43,366 for taxation. THE differential amount of Rs. 1,67,834 was claimed as loss or expenditure. Both the ITO and the Commissioner (Appeals) rejected the claim. THE appellate order of the Commissioner (Appeals) is dated 24-1-1980.
(2.) It appears that, the" Commissioner (Appeals) through inadvertence, omitted to deal with one or two other grounds in his appellate order. The assessee filed an application under Section 154 of the Income-tax Act, 1961 ('the Act'), which was disposed of by the Commissioner (Appeals) by his order dated 20-3-1980. The assessee has, thus, filed two appeals against the aforesaid two orders of the Commissioner (Appeals). However, the grounds are common and hence the appeals are disposed of together. It was noticed that conflicting views were taken on the issue by different Benches of the Tribunal in this case for different assessment years as well as in other cases. A Special Bench was, therefore, constituted to dispose of these appeals.
(3.) IT may be desirable to mention at the outset that Shri S.E. Dastur, the counsel for the assessee, stated that for the assessment year 1974-75 the Tribunal had decided the issue in favour of the assessee, that the reference application filed by the department arising out of the said order was rejected by the Tribunal and that the department's application under Section 256(2) of the Act was also rejected by the High Court. The department's special leave petition to the Supreme Court against the order of the High Court under Section 256(2), though admitted, it was further stated, has not been finally disposed of. The assessee was not aware of what happened in the other years in the case of the assessee and in other cases because the assessee could know about the fate of the department's application under Section 256(2), if any, only when it would receive a notice. Since no notice has yet been received, it could be reasonably presumed that the department did not prefer an application under Section 256(2) or that such an application has been rejected straightaway, without asking the assessee to appear. According to Shri Dastur the fact that the High Court rejected the application of the department under Section 256(2) holding that no question of law arose out of the order of the Tribunal indicated that the answer to the question was obvious or of academic interest. He urged that this would mean that the decision of the Tribunal in the case of the assessee for the assessment year 1974-75 had been approved by the High Court and that in that view of the matter not only that it was not open for the Tribunal to reconsider the issue but also that it was not quite proper for the President to constitute a Special Bench for hearing the matter. Shri Dastur placed reliance on the decision of the Bombay High Court in the case of H.A. Shah & Co. v. CIT [1956] 30 ITR 618 and the decisions of the Madras High Court in the cases of CIT v. S. Devaraj [1969] 73 ITR 1 and CIT v. L.G. Ramamurthi [1977] 110 ITR 453 in support of his contention.;

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