TRENT LTD, MUMBAI V. DCIT 2(3), MUMBAI

ITA 1162/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3189 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 08-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATHYA MOORTHYDR
• Keywords: Rule of consistency; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 147

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MU MBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C.N. PRASAD,JUDICIAL MEMBER ./ITA/1162/MUM/2011, /ASSESSMENT YEARS: 2005-06 TRENT LTD., BOMBAY HOUSE, 2 ND FLOOR 24, HOMI MODY STREET, FORT MUMBAI-400 001. PAN:AAACL 1838 J VS. DCIT-RANGE-2(3) AAYAKAR BHAVAN MUMBAI. ./ITA/1725/MUM/2011, /ASSESSMENT YEARS: 2005-06 DCIT-RANGE-2(3) AAYAKAR BHAVAN MUMBAI. VS. TRENT LTD. MUMBAI. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI SATHYA MOORTHY-DR ASSESSEE BY: SHRI NITESH JOSHI / DATE OF HEARING: 14.07.2016 / DATE OF PRONOUNCEMENT:24.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 06/12/2010 OF THE CIT ( A)-6,MUMBAI THE ASSESSING OFFICER(AO) AND THE ASSESSEE HAVE FILED THE CROSS-A PPEALS FOR THE YEAR UNDER CONSIDERATION.ASSESSEE-COMPANY, ENGAGED IN THE BUSI NESS OF RETAILING FOR READY- MADE GARMENTS ETC.FILED ITS ORIGINAL RETURN OF INCO ME ON 27.10.2005,DECLARING TOTAL INCOME AT RS. 12.75 CRORES.THE AO COMPLETED T HE ASSESSMENT U/S.143(3)OF THE ACT, ON 05.10.2007,DETERMINING ITS INCOME AT RS . NIL,AFTER SETTING OFF LOSS OF THE EARLIER YEARS. ITA/1162/MUM/2011: BRIEF FACTS- ON COMPARING THE RECORDS OF THE EARLIER AY.S.AND DU RING THE COURSE OF SCRUTINY PROCEEDINGS,CARRIED OUT FOR THE AY.2006-07,THE AO A RRIVED AT THE CONCLUSION THAT TAXABLE INCOME HAD ESCAPED ASSESSMENT,TO THE E XTENT OF RS. 35.21 LAKHS, WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147 OF THE ACT. THEREFORE, HE 1162/M/11&1725/M/11 TRENT LTD. 2 ISSUED A NOTICE U/S.148 OF THE ACT ON 18/03/2009. H E RECORDED THE FOLLOWING REASONS FOR THE REOPENING: ON PERUSAL OF THE RECORDS FOR AY 2005-06, IN THIS CASE OF THE ASSESSEE, IT IS OBSERVED THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME DECLARING T OTAL INCOME AT RS.12,75,74,630/- FOR AY 2005-06 ON 27-10-2005, THE CASE WAS PROCESSED U/S. 143( I) OF THE IT ACT ON 29.3.2006. AN ORDER U/S.143(3) DOTED 05-10-2007 WAS PASSED ASSESSING THE INCOME A T RS.NIL AFTER SETTING OFF THE BROUGHT FORWARD LOSSES AT RS.12,75,74,630/-. HOWEVER, ON PERUSAL OF RECORDS AND DURING THE COURSE OF SCRUTINY PROCEEDINGS CARRIED OUT FOR AY 2006-07, IT HAS COM E TO LIGHT THAT THE ASSESSEE HAS LET OUT ITS PROPERTY AT TAJ BUILDING, 210, D.N.ROAD, FORT, MUM BAI TO M/S.FREIGHT SYSTEMS (I) LTD .. UNDER ON AGREEMENT W.E.F 07-06-2000 FOR RS.4,0L,166/- PER MO NTH AND THEREBY OFFERED INCOME UNDER THE HEAD HOUSE PROPERTY AT RS.33,69,794/- AND THE TOTAL RECEIPTS CONSIDERED AS ANNUAL RENT WAS OF RS.48,13,992/-, WHICH WAS INCLUSIVE OF INCOME FROM HIRING OF FURNITURE & FIXTURE AT RS.36.81.288/- AND IN TURN IT MEANT THAT THE PROPERTY WAS GIVEN OU T ON ANNUAL RENT OF RS.LL.32.704/- (RS.48.13.992 - RS.36.81.288). HOWEVER, THE ANNUAL LETTING OUT VALU E (AL V) DETERMINED U/S.23 OF THE IT ACT FOR THE LET OUT PROPERTY IN QUESTION IS AT RS.35.50.000/- AS SEEN IN AY 2006-07 AND THEREBY THE DEDUCTION U/S.24 OF THE. IT ACT TOO SHALL BE RESTRICTED ACCO RDINGLY. HENCE. DEDUCTION @ 30% PREVIOUSLY CLAIMED AT RS.14.44,198/- U/S.24 OF THE IT ACT ON THE TOTA L FIGURE OF RS.48,13,992/-. SHALL BE RESTRICTED TO RS.10.65,000/- (@ 30% OF RS.35.50,000/- ONLY. IN VIEW OF THE SOME, THE INCOME UNDER THE HEAD INCO ME FROM HOUSE PROPERTY IS CONSIDERED AS FOLLOWS: I) ANNUAL LETTING OUT VALUE (AS DISCUSSED ABOVE) R S.35,50,000/- LESS: DEDUCTION U/S. 24 (30% OF ALV) RS.10,65,000 /- INCOME FROM HOUSE PROPER TY RS.24,85,000/- HENCE. ON INCOME FROM HOUSE PROPERTY AMOUNTING TO R S.24.17.296/- (RS.35,50.000 - RS.L1.32.704) NEEDS TO BE BROUGHT TO TAX AS THE S AME HAS ESCAPED ASSESSMENT. FURTHER, IT WAS ALSO FOUND THAT THE ASSESSEE HAS EN TERED INTO A DIFFERENT / DISTINCT AGREEMENT FOR THE INCOME EARNED FROM HIRING OF FURNITURE & FIXTUR ES TO THE ABOVE SAID PARTY @ RS.3.06.774/- PER MONTH I.E.. RS.36.81.288/- PER ANNUM (12 X RS.3.06, 774/-), BUT HOWEVER, THE SAME WAS NOT BEING OFFERED AS INCOME FROM OTHER SOURCES AND WAS SHOW N UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY AND DEDUCTION @ 30% U/S.24 OF THE IT ACT WAS ALSO CLAIMED AMOUNTING TO RS.11.04.386/- (30% OF RS.36,81,288/-). HOWEVER, THE SAME HAS TO BE A SSESSED AS INCOME FROM OTHER SOURCES AND NO DEDUCTION U/S.24 OF THE IT ACT IS ALLOWABLE. HENC E. AN AMOUNT OF RS.36,81,288/- SHALL NOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND RATHER BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE CLAIM OF DEDUCTIO N U/S.24 OF THE IT ACT AT RS. 11,04,386/- DISALLOWED AND BROUGHT TO TAX. IN VIEW OF THE ABOVE. I AM SATISFIED AND HAVE REAS ON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.35,21,682/- (RS.24,17,296/- + RS.11,04,386/-) CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISION OF SECTION 147 OF THE IT .ACT. HENCE, BASED ON THE SAME NOTICE U/S.148 OF THE IT ACT IS ISSUED TO THE ASSESSEE. THE ASSESSEE OBJECTED TO THE REOPENING OF THE COMPL ETED ASSESSMENT.HOWEVER,IT STATED THAT REASON LITTLE FILED BY IT SHOULD BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S.148 OF THE ACT.THE AO COMPLETED T HE ASSESSMENT ON 24/12/2009, U/S.143(3)R.W.S.147 OF THE ACT AND COMP LETED THE INCOME OF THE 1162/M/11&1725/M/11 TRENT LTD. 3 ASSESSEE AT RS. 13. 03CRORES.THE ASSESSEE CHALLENGE D THE ORDER OF THE AO BEFORE THE FIRST APPELLATE AUTHORITY(FAA)ON JURISDICTION A S WELL AS ON MERITS. BEFORE HIM, THE ASSESSEE MADE ELABORATE SUBMISSIONS WITH R EGARD TO INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT.HOWEVER IN A V ERY SHORT ORDER,HE OBSERVED THAT THE ASSESSEE HAD REITERATED THE SUBMISSIONS MA DE BY IT BEFORE THE AO FOR CONTESTING THE REOPENING OF THE ASSESSMENT,THAT THE SAME WERE ALREADY ADDRESSED BY THE AO, THAT THERE WAS NO OCCASION TO INTERFERE WITH THE ORDERS OF THE AO.IN SHORT,HE DID NOT ADJUDICATE THE GROUND, WITH REGARD TO JURISDICTION,BY A SPEAKING ORDER. 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR) CONTENDED THAT THE ASSESSEE HAD VIDE ITS LETTER DTD .12.09.2006,DURING THE ASSESSMENT PROCEEDING FOR THE AY.2004-05,HAD REPLIE D THE QUERY RAISED BY THE AO ABOUT THE RENTAL INCOME,THAT IT HAD SHOWED THE I NCOME UNDER THE HEAD HOUSE PROPERTY INCOME ,THAT AFTER CONSIDERING THE SUBMISS ION OF THE ASSESSEE THE AO WHILE COMPLETING THE SCRUTINY ASSESSMENT,HAD ASSESS ED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY,THAT IT WAS A CASE OF CH ANGE OF OPINION,THAT THE CASES OF SHABHU INVESTMENT (249ITR47)AND SONAWALA WERE BROUGHT TO THE NOTICE OF THE AO,THAT THE ASSESSEE HAD OFFERED THE INCOME AS PER THE PREVAILING LAW,THAT THE ORDER OF THE AO WAS AGAINST THE CIRCUL AR ISSUE BY THE CBDT,THAT THERE WAS NO ESCAPEMENT OF INCOME, THAT IT WAS A CA SE OF MERE CHANGE OF OPINION,THAT THE FAA HAD ACCEPTED THE SECOND PROPOS ITION OF THE ASSESSEE,THAT HE AGREED THAT THE AGREEMENT WAS A COMPOSITE AGREEM ENT AND THE INCOME WAS TO BE TAXED AS INCOME FROM HOUSE PROPERTY INCOME,THAT MUNICIPAL RATABLE VALUE SHOULD BE TAKEN AS ALV,THAT THE ASSESSEE HAD OFFERE D ACTUAL RENT AND SAME WAS HIGHER THAN MUNICIPAL LATTABLE VALUE. THE DEPARTMEN TAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO AND THE FAA. 1162/M/11&1725/M/11 TRENT LTD. 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD.THE UNDISPUTED FACTS OF THE CASE ARE THAT TH E AO HAD COMPLETED THE ORIGINAL ASSESSMENT U/S.143(3)OF THE ACT,THAT DURIN G THE ORIGINAL ASSESSMENT INQUIRY ABOUT THE HOUSE PROPERTY WAS MADE,THAT THE ASSESSEE HAD FILED REPLY IN THAT REGARD(PG. 12OF PB.). IN THAT LETTER THE ASSES SEE HAD SPECIFICALLY MENTIONED THAT INCOME WAS BEING OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY,THAT THE AO HAD ACCEPTED THE CLAIM MADE BY IT(PG.4-8 OF THE PB-II).THUS,A CONSCIOUS AND INFORMED DECISION WAS TAKEN BY THE AO ABOUT THE HEAD UNDER WHICH RENTAL INCOME WAS TO BE ASSESSED,THAT IN THE EARLIER YEAR ALSO THE ASSESSEE HAD SHOWN RENTAL INCOME U/S. 22 OF THE ACT,THAT FOR THE YEAR UNDER APPEAL THE ASSESSEE HAD CONSIDERED THE TOTAL RECEIPT OF RS.48.13 LAKHS(RS.1 1.32 LAKHS FOR LEASE OF PREMISES AND RS.36.81 LAKHS FOR HIRE CHARGES FOR US E OF FURNITURE AND FIXTURE) AS ALV OF THE PREMISES AND HAD INCLUDED IT UNDER THE H EAD INCOME FROM HOUSE PROPERTY,THAT THE AO HAD ASSESSED THE HIRE CHARGES UNDER THE HEAD INCOME FROM OTHER SOURCES DURING THE RE-ASSESSMENT PROCEEDINGS, THAT HE WAS NOT JUSTIFIED IN ASSESSING RS. 36. 81 LAKHS U/S.56 OF THE ACT. THERE IS NO DOUBT THAT PRINCIPLES OF RES JUDICATA A RE NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS AND THE AO IS NOT BOUND TO FOLLOW T HE EARLIER YEAR/(S)DECISION.BUT, THERE SHOULD BE SOME VALID RE ASONS FOR NOT FOLLOWING THE EARLIER YEAR/(S) ORDERS. WITHOUT MENTIONING THE DIS TINGUISHING FEATURES OF A PARTICULAR YEAR AS COMPARED WITH THE PECULIARITIES OF EARLIER YEARS HE CANNOT FOLLOW A NEW PATH.HE HAS TO EXPLAIN AS TO WHY AND H OW THE FACTS AND 1162/M/11&1725/M/11 TRENT LTD. 5 CIRCUMSTANCES OF THE TWO AY.S.ARE DISSIMILAR.RULE O F CONSISTENCY DEMANDS THAT IN ASSESSMENT PROCEEDINGS IT SHOULD BE FOLLOWED AS FAR AS POSSIBLE.PECULIAR DISTINGUISHING FACTS OF TWO ASSESSMENT YEARS AND NO T THE FANCIES OF THE AO SHOULD GOVERN THE RE-OPENING OF A COMPLETED SCRUTIN Y ASSESS -MENT.CHANGE OF FACTS AND NOT THE CHANGE OF OPINION OF THE AO HAS T O BE THE BASIS OF INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT.BUT,IN THE CAS E UNDER CONSIDE -RATION,WE FIND THAT NO NEW FACTS WERE BROUGHT ON RECORD BY TH E AO TO PROVE THAT THE EARLIER ORDER WAS NOT BASED ON FACTS OR THAT BECAUS E OF THE LATER JUDGMENTS OF THE HONBLE COURTS THE LEGAL POSITION HAS CHANGED.THUS, THERE IS CLEAR VIOLATION OF PRINCIPLE OF CONSISTENCY.WE FIND THAT IN THE CASES OF ASHOK MITTAL (360 ITR 12), MOHAN MEAKIN LTD.(189TAXMAN377)INDIA HABITAT CENTRE (203TAXMAN 510)THE RULE OF CONSISTENCY HAVE BEEN DISCUSSED AND FOLLOWE D. 5.1. WE WOULD LIKE TO REFER TO THE CASE OF JCB INDIA LTD .(376 ITR 621)THE HONBLE DELHI COURT HAS DEALT WITH THE PRINCIPLE OF CONSISTENCY.FACTS OF THE CASE WERE THAT THE TRIBUNAL,FOR THE AY.S.2007-08 AN D 2008-09, DELETED THE ADDITION MADE BY THE AO OF THE DEVELOPMENT CHARGES ON THE GROUND THAT IN SEVERAL PREVIOUS AY.S.THE PLEA OF THE ASSESSEE THAT IT WAS REVENUE EXPENDITURE WAS ACCEPTED.DISMISSING THE APPEALS FILED BY THE DEPARTMENT,THE HONBLE COURT HELD AS UNDER: THE ASSESSEE INCURRED THE DEVELOPMENT CHARGES ON RESEARCH AND TESTING OF COMPONENTS AND THAT THIS DID NOT RESULT IN A BENEFI T TO IT OF AN ENDURING NATURE SO AS TO CHARACTERISE THE DEVELOPMENT CHARGES AS CAPITAL EXP ENDITURE. TESTING OF PRODUCTS AND COMPONENTS IS ESSENTIALLY A CONTINUOUS PROCESS WHIC H PERMEATES DIFFERENT ACCOUNTING YEARS. IT IS AN INTEGRAL PART OF A ROUTINE MANUFACT URING AND MONITORING ACTIVITY. IT CANNOT OBVIOUSLY BE A ONE-TIME EVENT. THE REVENUE H AD NOT BEEN ABLE TO PERSUADE THE 1162/M/11&1725/M/11 TRENT LTD. 6 COURT THAT AN ERROR HAD BEEN COMMITTED IN ANY OF TH E PREVIOUS ASSESSMENT YEARS WHERE THE ASSESSEES EXPLANATION WAS ACCEPTED AND THE EXP ENDITURE ON DEVELOPMENT CHARGES WAS TREATED AS REVENUE EXPENDITURE. 6.IT IS SEEN THAT IN THE ORDERS IN ASSESSMENT PROCE EDINGS FROM WHICH THE PRESENT APPEALS ARISE, THE ASSESSING OFFICER DID NOT HOLD T HAT THE DETAILS PROVIDED BY THE ASSESSEE WERE INADEQUATE.HE ONLY OPINED ON THE BASI S OF THE DETAILS FURNISHED THAT THERE WAS A BENEFIT OF ENDURING NATURE TO THE ASSES SEE THEREBY AND THAT,THEREFORE, IT REQUIRED TO BE TREATED AS A CAPITAL EXPENDITURE. 7. WHEN THE MATTER WENT BEFORE THE DISPUTE RESOLUTI ON PANEL ('THE DRP'), THE HEARING TOOK PLACE ON AND SEPTEMBER 19 AND 20, 2011 . THE DISPUTE RESOLUTION PANEL ASKED FOR FURTHER DETAILS FROM THE ASSESSEE WHICH W ERE FURNISHED TO IT ON SEPTEMBER 23, 2011. IN ITS VERDICT DATED SEPTEMBER 26, 2011, THE DISPUTE RESOLUTION PANEL OPINED THE DETAILS FURNISHED TO BE 'CURSORY AND VAG UE' AND, THEREFORE, ACCEPTED THE OPINION OF THE ASSESSING OFFICER THAT IT WAS A CAPI TAL EXPENDITURE. AS RIGHTLY POINTED OUT BY MR. SYALI THE DISPUTE RESOLUTION PANEL DID N OT SEEK ANY CLARIFICATION OR EXPLANATION FROM THE ASSESSEE ON THE DETAILS PROVID ED. IN OTHER WORDS, THERE IS NO BASIS FOR EITHER THE ASSESSING OFFICER OR THE DISPU TE RESOLUTION PANEL TO SIMPLY CONCLUDE THAT THE BENEFIT OF AN ENDURING NATURE HAD BEEN DERIVED BY THE ASSESSEE AS A RESULT OF THE EXPENDITURE ON DEVELOPMENT CHARGES. 8.THE COURT IS SATISFIED WITH THE EXPLANATION OFFER ED BY THE ASSESSEE THAT IT IS INCURRING DEVELOPMENT CHARGES ON RESEARCH AND TESTING OF COMP ONENTS AND THAT THIS DOES NOT RESULT IN A BENEFIT TO IT OF AN ENDURING NATURE SO AS TO CHARACTERISE THE DEVELOPMENT CHARGES AS CAPITAL EXPENDITURE. THE COURT IS OF THE VIEW THAT TESTING OF PRODUCTS AND COMPONENTS IS ESSENTIALLY A CONTINUOUS PROCESS WHIC H PERMEATES DIFFERENT ACCOUNTING YEARS. IT IS AN INTEGRAL PART OF A ROUTINE MANUFACT URING AND MONITORING ACTIVITY. IT CANNOT OBVIOUSLY BE A ONE-TIME EVENT. 9.THE REVENUE HAS NOT BEEN ABLE TO PERSUADE THE COU RT THAT AN ERROR HAS BEEN COMMITTED IN ANY OF THE PREVIOUS ASSESSMENT YEARS W HERE THE ASSESSEE'S EXPLANATION WAS ACCEPTED AND THE EXPENDITURE ON DEVELOPMENT CHA RGES WAS TREATED AS REVENUE EXPENDITURE. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COURT IS ADDITIONALLY PERSUADED TO ADOPT THE RULE OF CONSISTENCY AND D ECLINE THE PLEA OF THE REVENUE TO REMAND THE MATTER TO THE ASSESSING OFFIC ER FOR A FRESH DETERMINATION. (EMPHASIS BY US). IN THE CASE OF GUJARAT ALKALIES AND CHEMICALS LTD.( 372 ITR 237),THE HONBLE GUJARAT HIGH COURT HAS ALSO DEALT WITH THE CONCEPT OF CONSISTENCY.IN THAT MATTER FOR THE AY.S.1999-2000 AND 2000-01,THE AO TREATED T HE EXPENDITURE ON REPLACE -MENT OF REMEMBRANING IN MEMBRANE CELL-1 PLANT AS C APITAL EXPENDITURE WHICH WAS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT A S REVENUE EXPENDITURE. IN APPEAL, THE FAA CONFIRMED THE ORDERS OF THE AO HOLD ING THAT IT WOULD BE CAPITAL EXPENDI -TURE AND NOT REVENUE EXPENDITURE.THE TRIBU NAL HELD THAT FOR THE AY.S,1993-94 AND 1995-96,SUCH EXPENDITURE WAS TREAT ED AS REVENUE EXPENDITURE BY THE AO HIMSELF AND THERE BEING NO MA TERIAL TO MAKE A DEPARTURE 1162/M/11&1725/M/11 TRENT LTD. 7 FROM THE EARLIER VIEW,THE RULE OF CONSISTENCY SHOUL D BE FOLLOWED AND,CONSEQUENTLY,THE TRIBUNAL ALLOWED THE APPEALS. BEFORE THE HONBLE HIGH COURT IT WAS ARGUED ,ON BEHALF OF THE ASSESSEE,THAT THE DUAL STAND ON THE PART OF THE DEPARTMENT WAS IMPERMISSIBLE AND COULD BE TITLE D AS 'FLIP-FLOP' CONDUCT OF THE DEPARTMENT,THAT IF THE REVENUE WAS AGGRIEVED BY SUCH A STAND OF THE AO FOR THE AY.S. OF 1993-94 AND 1995-96, THE MATTER COULD HAVE BEEN CARRIED FURTHER,BUT SAME WAS NOT CARRIED AND RATHER WAS ACC EPTED,THAT ONCE HAVING TOLD THAT THE EXPENDITURE WOULD BE TREATED AS REVENUE EX PENDITURE, IN THE ABSENCE OF ANY MATERIAL,IT WOULD NOT LIE IN THE MOUTH OF THE D EPARTMENT TO CONTEND THAT THE SAME WOULD BE TREATED AS CAPITAL EXPENDITURE,THAT T HAT THE TRIBUNAL'S VIEW WAS CORRECT AND SHOULD NOT BE INTERFERED WITH.DECIDING THE MATTER,THE HONBLE COURT HELD AS UNDER: THE CONSISTENCY EXPECTED ON THE PART OF THE REVENUE IN TAXATION MATTERS IS NOT UNKNOWN BUT RATHER IS EXPECTED (EMPHASIS BY US)SO AS TO MAKE THE ASSESSEE AWARE ABOUT THE TAXABLE LIABILITY. IF THE LEGAL POSITION IS CHANGED OR THERE IS COGENT MATERIAL AVAILABLE, THE REVENUE CAN TAKE A DIFFERENT STAND O R MAKE A VALID DEPARTURE BUT AT THE SAME TIME, IN THE ABSENCE OF ANY SUCH CIRCUMSTANCES , NAMELY, ANY MATERIAL LEADING TO A DIFFERENT CONCLUSION OR CHANGE IN THE LEGAL POSIT ION, THE CONSISTENCY ON THE PART OF THE REVENUE SHOULD BE ADHERED TO. WE WOULD ALSO LIKE TO REFER TO THE CASE OF JYOTI PR AKASH DUTTA (367 ITR 568) OF THE HONBLE BOMBAY HIGH COURT.FACTS OF THE CASE WER E THAT THE TRIBUNAL HAD DISALLOWED THE CLAIM IN THE CASE OF THE ASSESSEE IN PRIOR YEARS SAYING THAT A FILM PRODUCTION UNIT OR A COMPANY WAS NOT AN INDUSTRIAL UNDERTAKING WITHIN THE MEANING OF SECTION 80-IB OF THE ACT,BUT THE DISALLO WANCE WAS SET ASIDE BY THE HIGH COURT.THE DEPARTMENT,IN SPITE OF THE JUDGMENT, TOOK UP THE ISSUE BEFORE THE COURT. DISMISSING THE APPEAL,THE HONBLE COURT HELD AS UNDER: 12. EQUALLY, WE FIND THAT WHEN THE TRIBUNAL PASSED AN ORDER IN THE CASE OF THE VERY ASSESSEE, AND WHICH ORDER COULD NOT BE SUCCESSFULLY ASSAILED BY THE REVENUE, THEN, INSTEAD OF FOLLOWING AND APPLYING IT AND MAINTAININ G AND UPHOLDING THE RULE OF 1162/M/11&1725/M/11 TRENT LTD. 8 CONSISTENCY, THE AUTHORITIES DISOBEY THE SAME. THE TRIBUNAL'S ORDER AND IN THE CASE OF THE VERY ASSESSEE HAVE DURING PRIOR ASSESSMENT YEAR S CONSIDERED IDENTICAL QUESTIONS AND ISSUES. WE DO NOT SEE HOW THE REVENUE CAN REPEA TEDLY BRING MATTERS BEFORE THIS COURT AND ON THE SAME ISSUES IN SUCCESSIVE YEARS WH EN IT HAS NOT BEEN ABLE TO SUCCEED IN ITS EARLIER ENDEAVOUR. THIS TENDENCY WILL HAVE T O BE CURBED BECAUSE THE FACTUAL MATTERS ARE BEING REOPENED BY SUCH REPEATED EXERCIS ES AND WE STRONGLY DISAPPROVE THE SAME. WHEN THE PARTIES HAVE DEALT WITH EACH OTH ER, FOR NUMBER OF YEARS AND KNOWING FULLY WELL WHAT THE ISSUES ARE, THEN, THE L EAST THAT IS EXPECTED FROM THE DEPARTMENT OR THE REVENUE IS THAT IT WILL ABIDE BY THE TRIBUNAL'S ORDERS AND GRANT THE DEDUCTION IN ACCORDANCE THEREWITH. MORE SO, WHEN TH E TRIBUNALS' ORDERS ARE CHALLENGED IN THIS COURT BUT THE CHALLENGE FAILS, T HE VERY CONTENTION RAISED BEFORE THE TRIBUNAL BUT NOT ACCEPTED IS SOUGHT TO BE RAISED. W E DO NOT SEE HOW A COURT OF LAW, THAT TOO THE HIGHEST COURT, CAN BE CALLED UPON TO U NDERTAKE AN EXERCISE TO CONVINCE THE REVENUE THAT WHAT IT IS URGING BEFORE IT IS NOT TEN ABLE EITHER IN LAW OR IN FACTS. IT IS NOT THE FUNCTION OF THIS COURT TO PURSUADE THE AUTHORIT IES. THEY MUST ACCEPT THE CLAIMS OR DEDUCTIONS AS IN THE PRESENT CASE AND FOLLOW THE TR IBUNAL'S ORDERS ON FACTUAL ISSUES. THAT WOULD UPHOLD RULE OF CONSISTENCY AND CERTAINTY .(EMPHASIS SUPPLIED).WE FIND THAT EXTREME ARGUMENTS ARE CANVASSED SO AS TO TAKE A CHANCE AND TRY TO UNSETTLE THE SETTLED MATTERS AND THINGS. THIS TENDENCY HAS TO BE CURBED AND WE MUST COME DOWN HEAVILY ON PARTIES TO CURB IT, MAY IT BE THE REVENU E. HONBLE BOMBAY HIGH COURT IN THE CASE OF GOPAL PURO HIT(336ITR287)HAS HELD THAT THAT THERE SHOULD BE UNIFORMITY IN TREATMENT A ND WHEN FACTS AND CIRCUMSTANCES FOR DIFFERENT YEARS WERE IDENTICAL PA RTICULARLY IN THE CASE OF THE SAME ASSESSEE. WE FIND THAT IN THE MATTERS OF EXCEL INDUSTRIES(358 ITR295) AND OTHERS THE QUESTION FOR CONSIDERATION WAS WHETHER THE BENEFIT OF AN ENTITLEMENT TO MAKE DUTY FREE IMPORTS OF RAW MATERIALS OBTAINED BY THE ASSESSEE THROUGH ADVANCE LICENCES AND DEPB ISSUED AGAINST EXPORT OBLIGATIONS IS INCOME IN THE YEAR IN WHICH THE EXPORTS WERE MADE OR IN THE YEAR IN WHICH THE DUTY FREE IMPORTS ARE MADE.DECIDING THE APPEAL THE HONBLE APEX COURT HEL D AS UNDER: 1162/M/11&1725/M/11 TRENT LTD. 9 28. SECONDLY, AS NOTED BY THE TRIBUNAL, A CONSISTE NT VIEW HAS BEEN TAKEN IN FAVOUR OF THE ASSESSEE ON THE QUESTIONS RAISED, STARTING W ITH THE ASSESSMENT YEAR 1992-93, THAT THE BENEFITS UNDER THE ADVANCE LICENCES OR UND ER THE DUTY ENTITLEMENT PASS BOOK DO NOT REPRESENT THE REAL INCOME OF THE ASSESSEE. C ONSEQUENTLY, THERE IS NO REASON FOR US TO TAKE A DIFFERENT VIEW UNLESS THERE ARE VE RY CONVINCING REASONS, NONE OF WHICH HAVE BEEN POINTED OUT BY THE LEARNED COUNSEL FOR THE REVENUE. XXXXXXXX XXXXXX 30.REFERENCE WAS ALSO MADE TO PARASHURAM POTTERY WO RKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) AND THEN IT WAS HELD (PAGE 329 OF 19 3 ITR) : 'WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RE S JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. ON THESE REASONINGS IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER-AND IF THERE WAS NO CHANGE IT WAS IN SUPPORT OF THE ASSESSEE-WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY T HE COMMISSIONER OF INCOME-TAX IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. ' (EMPHASIS ADDED) 31.IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSES SMENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPECT OF SOME ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIGH COURT BUT WITHOUT ANY SUCCESS. THAT BEING SO, THE REVENUE CANNOT BE ALLOWED TO FLIP- FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER THAN SPEND THE TAXPAYERS' MONEY IN PURSUING LITIGATION FOR THE SAKE OF IT. 5.2. FROM THE ABOVE,ONE THING BECOME CRYSTAL CLEAR THAT IF AN AO DOES NOT FOLLOW THE EARLIER YEAR/(S) DECISION WITHOUT GIVING ANY CO GENT AND REASONABLE EXPLANATION, HIS ACTION CANNOT BE ENDORSED.IN THE C ASE BEFORE US,THE FAA HAS NOT DEALT WITH THE JURISDICTIONAL ISSUE.IN A ROUTIN E MANNER HE HAS UPHELD THE REOPENING,WITHOUT CONSIDERING THE FACT THAT THE AO HAD,WHILE COMPLETING THE ASSESSMENT,FOR THE EARLIER YEARS,U/S.143(3) OF THE ACT HAS HELD THAT RENTAL INCOME WAS TO BE ASSESSED AS HOUSE PROPERTY INCOME AND HAD NOT BROUGHT ON RECORD THE NEW FACTS THAT COMPELLED HIM TO CHANGE THE HEADS OF INCOME.THUS,THE RE- OPENING WAS NOT AS PER THE ESTABLISHED PRINCIPLES O F TAXATION JURISPRUDENCE.SO,WE HOLD THAT THE ORDER PASSED BY T HE AO,U/S.143(3)R.W.S.147 OF 1162/M/11&1725/M/11 TRENT LTD. 10 THE ACT WAS NOT VALID.REVERSING THE ORDER OF THE FA A, FIRST GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE.AS WE HAVE HELD T HAT THE ORDER OF THE AO WAS AN INVALID ORDER,WE ARE NOT DECIDING THE OTHER GROU NDS RAISED BY IT. ITA/1162/MUM/2011 6. APPEAL FILED BY THE AO,IS DISMISSED,AS THE JURISDIC TIONAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED AND THE APPEAL OF THE AO IS DISMISSED. ORDER PRONOUNCED I N THE OPEN COURT ON 24 TH AUGUST,2016. 24 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ! , 4. THE CONCERNED CIT / ! 5. DR E BENCH, ITAT, MUMBAI / ' , , . . . 6. GUARD FILE/ #$ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.