V.S. Sirpurkar, J. - (1.) This Judgment will dispose of two Appeals, they being civil Appeal Nos. 482 of 2003 and 483 of 2003. These Appeals are filed by the Commissioner of Income Tax, Ahmedabad (hereinafter referred to as "Revenue"). In both the Appeals, the Revenue challenges the common judgment passed by the Gujarat High Court, wherein, the High Court was considering Income Tax Reference ( ITR ) Nos. 56 of 1986, 58 of 1993, 220 of 1995 and 75 of 1987. These References were made out of the order of Income Tax Appellate Tribunal (hereinafter referred to as "the Tribunal").
(2.) It is agreed before us that presently we would be concerned only with two References, they being Reference No. 56 of 1986 and Reference No. 220 of 1995. Insofar as Reference No. 75 of 1987 is concerned, though the High Court had answered in favour of Revenue and against the assessee, the assessee did not file any appeal and, therefore, that part of the High Court Judgment dealing with Income Tax Reference No. 75 of 1987 becomes final. The learned Counsel for the assessee very fairly agreed with the same. As regards the Income Tax Reference No. 58 of 1993, the Revenue had filed an appeal against the impugned judgment dealing with the same, however, this Court had dismissed the appeal filed by the Revenue on the grounds of limitation. The learned Senior Counsel Mr. P.V. Shetty, appearing on behalf of the Revenue very fairly admitted this position. We are, therefore, left with only two References, which are as under: Income Tax Reference No. 56 of 1986 (which emanated from the quantum proceedings in respect of the Assessment Years 1979-80 and 1980-81): For the Assessment year 1979-80 - at the instance of the assessee: (i) Whether on facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest of Rs. 66,29,236/- being the amount of interest as determined by the Income Tax Officer on a notional basis from 1.7.1977 to 30.6.1978 was liable to tax on accrual basis for the Assessment Year 1979-80 (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the interest accrued from day-to-day as a result of supplementary agreement and as such, the same was eligible to tax as income for Assessment Year 1979-80 (iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in holding that giving up of interest on the ground of commercial expediency was not justified as no direct or indirect benefit had accrued to the assessee For the Assessment Year 1980-81 - at the instance of the Revenue: (i) Whether the Appellate Tribunal has not erred in law and on facts in holding that no income could be said to be accrued to the assessee as the interest would start accruing from 1.7.1979, i.e., after the end of the accounting year (ii) Whether the finding of the Tribunal that the interest could not be said to be accrued to the assessee during the accounting period in question and hence, question of relinquishment of any right does not arise is correct in law Income Tax Reference No. 220 of 1995: Income Tax Reference No. 220 of 1995 was filed at the instance of the assessee in respect of the penalty levied under Section 273(2)(a) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and the Reference was worded as under: Whether on facts and in the circumstances of the case, the Tribunal was justified in law in confirming the penalty of Rs. 4 lakhs levied under Section 273(2)(a) of the Act
(3.) Before we go further, it must be clarified that insofar as Assessment Year 1979-80 is concerned, the High Court answered the Reference No. 56 of 1986 in favour of the Revenue, while insofar as Assessment Year 1980-81 is concerned, the High Court answered it in favour of the assessee and against the Revenue. The assessee has not challenged the judgment of the High Court insofar as Assessment Year 1979-80 is concerned, therefore, we need not consider that part of the High Court judgment, though we might be required to incidentally refer to the same. Thus, we are left with Reference No. 56 of 1986 insofar as it pertains to Assessment Year 1980-81 and the Reference No. 220 of 1995. We must again clarify that though in Reference No. 220 of 1995, the High Court found against the assessee in respect of Assessment Year 1979-80, the penalty, however, of Rs. 4 lakhs was set aside. We are, therefore, concerned in Reference No. 220 of 1995, only with Assessment Year 1979-80.;