INCOME TAX ACT, 1961

Section 4

Satute - Interpretation - Applicability of principle of constructive resjudication vis-a-vis merger -

The Tribunal's coordinate bench vide Order, dated 31-3-2010 vide para number 8, had not been decided a particular ground and as such, it was a 'mistake apparent from record'. The said ground was whether amount received by the Appellant from the franchisees towards advertising contributions were diverted at source by overriding title for being spent on advertisement, and coordinate bench of the Tribunal noted that the stated ground was not found to have been 'not pressed', non-disposal of the said ground amounts to a mistake apparent on record. Therefore, even subsequent to the decision of High court, coordinate bench recalled the order partially. AR stated that since there was an overriding obligation on the appellant to spend the contributions for AMP activities, the contributions were 'diverted at source by overriding title' and therefore, there was no question of application or non-application of an amount, which was not in the nature of income in the hands of the appellant. DR stated that when the High Court had already decided the issue, the principles of finality say that now this issue cannot be decided. For this proposition, he relied upon the principles of 'constructive res judicata.' Held: When an order had been challenged before the higher forum and higher forum adjudicate it on the issue, the Tribunal was precluded from dealing with any of the matter relating to the aspect of that particular ground. Thus, according the issue raised in ground number 1 (b) of the grounds of appeal had already reached finality and Tribunal was barred by the principle of finality and to an extent the doctrine of merger. No arguments were mentioned before the coordinate bench when the matter originally heard and same was also not agitated before the High Court, therefore, it was apparent that the matter had reached the finality.

Relied:CIT v. NE Portfolio Private Ltd. (2019) 103 Taxmann.com 17 (Del) : 2019 TaxPub(DT0 1623 (Del-HC). Applied:CIT v. Sitaldas Tirathdas (1961) 41 ITR 367 (SC) : 1961 TaxPub(DT) 145 (SC). Distinguished:CIT v. Bijlii Cotton Mills (1979) 116 ITR 60 (SC) : 1979 TaxPub(DT) 812 (SC).

REFERRED : Siddheshwar Sahakari Sakhar Karkhana Ltd. v. CIT (2004) 270 ITR 1 (SC) : 2004 TaxPub(DT) 1885 (SC), CIT v. Netar Krishna Sahgals Pr. Ltd. (Del) (1983) 141 ITR 681 (Del) : 1983 TaxPub(DT) 664 (Del-HC), Mehboob Productions Pvt. Ltd. v. CIT (1977) 106 ITR 758 (Bom) : 1977 TaxPub(DT) 307 (Bom-HC), Bass International Holdings NV v. Jt. CIT [ITA No. 4341/Mum/02], CIT v. Late Rajesh Pilot (2008) 219 CTR 403 (Del) : 2008 TaxPub(DT) 2022 (Del-HC), Loknete Balasaheb Desai Sahakari Sakhar Karkhana Ltd. v. Dy. CIT 148 ITD 372 (Pune-Trib), Dy. CIT v. T Jayachandaran (Supreme Court) [Civil Appeal No. 4341-4344, 4346-4357 of 2018] : 2018 TaxPub(DT) 2011 (SC), Official Trustee of West Bengal v. CIT (1979) 116 ITR 219 (Cal : 1979 TaxPub(DT) 515 (Cal-HC), DCM Limited v. CIT (1986) 158 ITR 64 (Del) : 1986 TaxPub(DT) 495 (Del-HC), State of Karnataka & Anr v. All India Manufacturers Organization & Ors. Appeal (Civil) 3492-3494 of 2005, Forward Construction Co. & Ors. v. Prabhat Mandal (Regd.) Andheri & Ors. 1986 AIR 391 SC : 1985 SCR Supl. (3) 766, Forward Construction Co. & Ors. v. Prabhat Mandal (Regd.) Andheri & Ors. 1986 AIR 391 SC : 1985 SCR Supl. (3) 766, Workmen v. Board of Trustees, Cochin Port Trust (1978) 3 SCC 119 (SC), Ramadhar Shrivas v. Bhagwandas (2005)13 SCC 1, Electrocast Sales India Ltd. v. DCIT, (2018) 170 ITD 507 (Kolkata-Trib.) : 2018 TaxPub(DT) 1746 (Kol-Trib), CIT v. T.P. Kumaran (1996) 88 Taxman 206 (SC) : 1997 TaxPub(DT) 185 (SC), K.K. Modi v. K.N. Modi (1998) 3 SCC 573 (SC), CIT, Bombay v. Amritlal Bhogilal and Co. AIR 1958 SC 868 : 1958 TaxPub(DT) 184 (SC), Kunhayammed & Ors. v. State of Kerala & Anr. (2000) 6 SCC 359 : 2000 TaxPub(DT) 1461 (SC), Indian Council for Enviro-Legal Action v. UOI & Ors. (2011) INSC 626 (18-7-2011) in IA No. 36 &44 in WP (C) No. 967 of 1989, Pr. CIT v. Chamundi Winery & Distilley (2018) 97 Taxmann.com 568 (Karn) : 2018 TaxPub(DT) 6158 (Karn-HC), Fr. Sunny Jose v. UOI (2015) 60 Taxmann.com 386 (Kerala) : 2015 TaxPub(DT) 2091 (Ker-HC) and Nirma Industries Ltd. v. Dy. CIT (2006) 283 ITR 402 (Guj) : 2006 TaxPub(DT) 1420 (Guj-HC).

FAVOUR : Aganst the assessee.

A.Y. : 2008-09

INCOME TAX ACT, 1961

Section 4

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