G.D. METSTEEL P. LTD, PUNE V. ACIT 6(3), MUMBAI

ITA 2071/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48462 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K NAYAK
• Keywords: Capital asset; Earning of tax free income; Advance ruling; Cost of acquisition
• Section: 43B; 143(3); 14A

Judgement Text

ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH, MUMBAI [CORAM: D K AGARWAL JM AND PRAMOD KUMAR AM] ITA NO.: 2071/ MUM/2009 ASSESSMENT YEAR: 2005-06 G. D. METSTEEL PVT. LTD. APPELLANT 205, UPPER SECOND FLOOR, GERA JUNCTION, NEAR WINNER COURT, LULLA NAGAR CHOWK, KONDHWA ROAD, PUNE-40 VS ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 6(3), MUMBAI ..RESPONDENT APPEARANCES: VIJAY KOTHARI, FOR THE APPELLANT A.K. NAYAK, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED,16 TH DECEMBER, 2008, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2005-06. ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 2 OF 11 2. IN GROUND NO.1, THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE: THE LEARNED CIT (A) ERRED IN DISALLOWING THE CLAIM OF DEDUCTION OF BONUS PAID OF RS.1,05,008 UNDER SECTION 43B, DESPIT E THE FACT THAT THE APPELLANT HAD PAID BONUS PRIOR TO THE DUE DATE OF F ILING OF RETURN OF INCOME U/S.139(1). 3. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. IN T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED RS.1,00,508 TOWARDS PAYMENT OF BONUS TO THE EMPLOYE ES. HOWEVER, IN THE RETURN OF INCOME FILED BY THE ASSESSEE ON 24.10.200 5, THERE WAS NO PROOF FOR THE SAME. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE UNPAID BONUS AMOUNT OF RS.1,00,508 SHOULD NOT B E DISALLOWED. IN RESPONSE TO ASSESSING OFFICERS AFORESAID REQUISITI ON, IT WAS SUBMITTED BY THE ASSESSEE THAT, OUT OF THE PROVISION OF RS 1,05,008 IN RESPECT OF BONUS, AN AMOUNT OF RS.75,512 WAS PAID BEFORE 31.10.2005 I.E. BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE ASSESSING OFFICER HOWEVER REJECTED THE CLAIM BY OBSERVING THAT AS PER TAX AUDIT REPORT, THE ASS ESSEE HAS NOT PAID BONUS AMOUNT OF RS 1,05,008, EITHER DURING THE PREVIOUS Y EAR OR ON THE DATE OF THE TAX AUDIT REPORT, NOR HAS FURNISHED ANY EVIDENCE FO R PAYMENT OF BONUS OF RS 75,512 BEFORE 31.10.2005 ALONGWITH THE RETURN OF IN COME. IT WAS ALSO OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED ANY EV IDENCE OF SUCH PAYMENT BEFORE 31 ST OCTOBER 2005. IT WAS IN THIS BACKDROP THAT THE AS SESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. THE CIT (A) NOTED THAT, IN TERMS OF THE REQUIREMENTS OF SECTION 43 B, NOT ONLY THAT THE AMOUNT HAS TO BE PAID BEFORE THE DUE DATE OF FILING THE INCOME TAX RETURN BUT ALSO THE EVIDENCE OF SUCH PAYMENT HAS TO BE FURNISHED ALONGWITH THE RETU RN OF INCOME. IN THE PRESENT CASE, EVEN THOUGH PAYMENT OF BONUS WAS MADE BEFORE THE DUE DATE OF FILING THE INCOME TAX RETURN, I.E. 31 ST OCTOBER 2005, SINCE THE PAYMENT WAS ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 3 OF 11 MADE AFTER THE ACTUAL DATE OF FILING THE INCOME TAX RETURN, I.E. 24 TH OCTOBER 2005, THE EVIDENCE OF PAYMENT OF BONUS WAS ADMITTED LY NOT ATTACHED WITH THE RETURN OF INCOME FILED BY THE ASSESSE. THIS, ACCORD ING TO THE CIT(A), CLEARLY SHOWS THAT THE CONDITIONS SET OUT IN SECTION 43B WE RE NOT SATISFIED ON THE FACTS OF THIS CASE. THE DISALLOWANCE WAS THUS CONFI RMED. NOT SATISFIED BY THE STAND SO TAKEN BY THE CIT(A) AS WELL, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE SEE MERITS IN THE GRIEVANCE OF THE ASSES SEE. IT IS WELL SETTLED , IN VIEW OF HONBLE SUPREME COURTS JUDGEMENT IN THE CA SE OF CIT V. ALOM EXTRUSIONS LTD., 319 ITR 306 THAT DELETION OF SECON D PROVISO TO SECTION 43B BY FINANCE ACT, 2003 IS RETROSPECTIVE AND IT WOULD OPE RATE WITH EFFECT FROM 1.4.1988. ACCORDINGLY, THE AMOUNT PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER SECTION 139(1) OF THE ACT IS NOT HIT BY DISA LLOWANCE UNDER SECTION 43B. NO DOUBT, THE ASSESSEE IS REQUIRED TO FURNISH EVIDE NCE OF SUCH PAYMENT ALONG WITH THE INCOME TAX RETURN BUT THEN IN THE PRESENT CASE, THE RETURN WAS FILED ON 24.10.2005 AND THE BONUS PAYMENT IS MADE AFTER T HE DATE OF FILING OF THE RETURN I.E. 30.10.2005. WHILE THE PAYMENT WAS MADE WITHIN PERMISSIBLE TIME, DUE TO INCOME TAX RETURN HAVING BEEN FILED PRIOR TO THAT DATE, IT WAS AN IMPOSSIBILITY TO FURNISH THE EVIDENCE OF PAYMENT, A LONGWITH THE INCOME TAX RETURN. IN OUR CONSIDERED VIEW, SUBSTANTIVE REQUIRE MENT IS PAYMENT WITHIN THE TIME PERMISSIBLE FOR FILING OF INCOME TAX RETUR N UNDER SECTION 139(1) AND FURNISHING THE EVIDENCE IS A PROCEDURAL REQUIREMENT . THE EVIDENCE OF PAYMENT WAS DULY FURNISHED BEFORE THE CIT(A) AND IS FILED BEFORE US AS WELL. WE HAVE ALSO NOTED THAT THE ASSESSING OFFICERS OBS ERVATION TO THE EFFECT THAT NO EVIDENCE WAS FILED DURING ASSESSMENT PROCEEDINGS HAS BEEN CALLED INTO QUESTION IN THE STATEMENT OF FACTS FILED BEFORE THE CIT(A). BEARING IN MIND ALL THESE FACTS, AS ALSO TREATING THE FURNISHING OF EVI DENCE AS A PROCEDURAL REQUIREMENT WHICH HAS NOW BEEN FULLY COMPLIED WITH, WE ARE OF THE ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 4 OF 11 CONSIDERED VIEW THAT THE DISALLOWANCE WAS INDEED WR ONGLY SUSTAINED BY THE CIT(A). WE DISAPPROVE HIS ACTION, AND, ACCORDINGLY, DELETE THE IMPUGNED DISALLOWANCE. 6. GROUND NO. 1 IS THUS ALLOWED. 7. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.5000 T OWARDS PAYMENT OF DONATION. 8. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT (A) TO INTERFERE. IT IS NOTED THAT THE ASSESSEE HAS PAID RS.5000 TOWARDS DONATION FOR TEMPLE CONSTRUCTION BUT NO PROOF OF EXEMPTION, UNDER SECTI ON 80G, WAS FILED AT ANY STAGE OF PROCEEDINGS. IN VIEW OF THIS, WE UPHOLD T HE ORDER OF THE CIT (A). THIS GROUND IS DISMISSED. 9. IN THE THIRD AND FOURTH GROUND OF APPEAL, THE AS SESSEE HAS RAISED THE FOLLOWING GRIEVANCES: 3. THE LD CIT (A) ERRED IN DISALLOWING THE CLAIM OF DEDUCTION OF INTEREST OF RS.2,92,593 AND WHILE DOING SO HE AMONG ST OTHER FAILED TO APPRECIATE THAT: A. IN THE APPELLATE ORDER IN APPELLANTS OWN CASE FO R A.Y. 2001-02, THE CLAIM OF DEDUCTION OF INTEREST WAS ALL OWED AS DEDUCTION. B. PROVISIONS OF SECTION 14A WAS NOT APPLICABLE TO THE FACTS ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 5 OF 11 OF APPELLANTS CASE INSOFAR AS THERE WAS NO INCOME W HICH WAS EXEMPT UNDER THE PROVISIONS OF THE ACT. 4. THE LD CIT (A) ERRED IN DISALLOWING LUMPSUM AMOU NT OF RS.1,00,000 WITHOUT ANY BASIS. 9. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS INVESTMENTS AMOUNTING TO RS 62,89,527, AND THE ASSESSEE HAS ALSO PAID INTEREST ON BORROWINGS. WHEN THE ASSESSING OFFICER PROBED MATTER FURTHER FROM THE POINT OF VIEW OF MAK ING DISALLOWANCE UNDER SECTION 14A, IT WAS POINTED OUT TO HIM THAT THE INV ESTMENTS WERE MADE FROM OWN FUNDS IN THE PRECEDING YEARS AND, AS SUCH, NO P ART OF THE INTEREST PAYMENTS COULD BE ATTRIBUTED TO THESE INVESTMENTS. THIS EXPLANATION, HOWEVER, DID NOT IMPRESS THE ASSESSING OFFICER. HE WAS OF TH E VIEW THAT SINCE ASSESSEE HAS A NEGATIVE NET WORTH, IT CANNOT BE SAID THAT BO RROWED AMOUNTS HAVE NOT BEEN USED IN INVESTMENTS. HE WAS FURTHER OF THE VIE W THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT BORROWINGS ATTRIBUTABLE TO INTEREST CLAIMED AS DEDUCTION HAVE BEEN USED FOR BUSINESS PURPOSES AND NOT INVESTMENTS. HE WAS ALSO OF THE VIEW THAT SOME EXPENSES HAVE TO BE TREA TED AS ATTRIBUTABLE TO INVESTMENTS. IT WAS IN THIS BACKDROP THAT HE PROCE EDED TO ALLOCATE INTEREST IN THE RATIO OF INVESTMENTS TO TOTAL FUNDS, AND DISALL OW RS 2,92,593 UNDER SECTION 14A OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. RELYING UPON HONB LE PUNJAB & HARYANA HIGH COURTS JUDGMENT IN THE CASE OF CIT VS ABHISHE K INDUSTRIES (286 ITR 1), HE APPROVED THE ACTION OF THE CIT(A) AND DECLINED T O INTERFERE IN THE MATTER. A DISALLOWANCE OF RS 1 LAKH WAS MADE, ON LUMPSUM BA SIS, IN RESPECT OF EXPENSES INCURRED ON EARNING EXEMPT INCOME BY WAY O F DIVIDENDS ETC, WHICH HAS BEEN CONFIRMED IN APPEAL BY THE CIT(A) AS WELL. THE ASSESSEE IS NOT SATISFIED ON BOTH OF THESE COUNTS AND IS IN FURTHER APPEAL BEFORE US. ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 6 OF 11 10. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE NOT INCLINED TO UPHOLD THE STAND OF THE AUTHORITIES BELOW. WHEN INVESTMENTS ARE MADE FROM OWN FUNDS, MERELY BECAUSE THE ASSESSEE HAD TO SUBSEQUENTLY BORROW THE FUNDS FOR BUSINESS USE, IT CANNOT BE SAID THAT THE BORROWED FUNDS HAVE BEEN USED FOR THE PURPOSES OF I NVESTMENTS. THE PRICNIPLE LAID DOWN IN ABHISHEK INDUSTRIES CASE (S UPRA) HAVE NOT BEEN APPROVED BY HONBLE SUPREME COURT IN A SERIES OF CA SES, INCLUDING THE CASE OF MUNJAL SALES CORPORATION VS CIT (298 ITR 298). THER E WAS NO SUCH DISALLOWANCE IN THE EARLIER YEARS AND THE INVESTMEN TS ARE OLD INVESTMENTS. IN THESE CIRCUMSTANCES, THE ASSESSEE IS QUITE JUSTIFIE D IN CONTENDING THAT NO PART OF THE INTEREST PAID ON BORROWINGS COULD BE TREATED AS HAVING BEEN USED FOR THE PURPOSES OF INVESTMENTS, AND, ACCORDINGLY, NO D ISALLOWANCE UNDER SECTION 14 A CAN BE MADE IN RESPECT OF THE SAME. THE DISALL OWANCE IN RESPECT OF INTEREST IS DELETED. HAVING HELD SO, HOWEVER, A R EASONABLE PORTION OF MANAGEMENT EXPENSES CAN INDEED BE DISALLOWED UNDER SECTION 14A, AND FOR THAT LIMITED PURPOSE AND FOR FRESH ADJUDICATION IN THE LIGHT OF PRINCIPLES LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF GODREJ & BOYCE MFG CO LTD VS DCIT (328 ITR 81), THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 11. GROUND NO. 3 IS THUS ALLOWED AND GROUND NO. 4 I S THUS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 12. GROUND NO.5 READS AS UNDER:- THE LD CIT (A) ERRED IN NOT ALLOWING LOSS OF RS.2,1 3,82 ON SALE OF PREFERENCE SHARES BY DENYING INDEXATION BENEFIT NOT WITHSTANDING THE FACT THAT 3 RD PROVISO TO SECTION 48 DENIES INDEXATION BENEFIT ON LY TO BONDS & DEBENTURES. ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 7 OF 11 13. AS FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CON CERNED, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT THE ASSESSING OFFICER HA S DECLINED TO GRANT INDEXATION BENEFIT IN TERMS OF SECOND PROVISO TO SE CTION 48, ON THE GROUND THAT SINCE PRICES OF PREFERENCE SHARES DONOT FLUCTU ATE, AND SINCE THESE SHARES CANNOT BE TREATED AS PAR WITH EQUITY SHARES, INDEXA TION BENEFITS CANNOT BE GRANTED IN RESPECT OF THE SAME. IN APPEAL, THE CIT( A) HAS CONFIRMED THE ACTION AND RATIONALE OF THE ASSESSING OFFICER. THE ASSESSE E IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 14. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE UNABLE TO SEE ANY MERITS IN THE STAN D OF THE AUTHORITIES BELOW. THE PROVISIONS OF LAW ARE QUITE CLEAR AND UNAMBIGUO US. SECOND PROVISO TO SECTION 48 PROVIDES THAT, WHERE LONG-TERM CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, OTHER THAN C APITAL GAIN ARISING TO A NON- RESIDENT FROM THE TRANSFER OF SHARES IN, OR DEBENTU RES OF, AN INDIAN COMPANY REFERRED TO IN THE FIRST PROVISO, THE PROVISIONS OF CLAUSE ( II ) SHALL HAVE EFFECT AS IF FOR THE WORDS COST OF ACQUISITION AND COST OF ANY IMPROVEMENT, THE WORDS INDEXED COST OF ACQUISITION AND INDEXED CO ST OF ANY IMPROVEMENT HAD RESPECTIVELY BEEN SUBSTITUTED. THE ONLY EXCEPT ION TO THIS PROVISION IS THAT IT SHALL NOT APPLY TO THE LONG-TERM CAPITAL G AIN ARISING FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET BEING BOND OR DEBENTUR E OTHER THAN CAPITAL INDEXED BONDS ISSUED BY THE GOVERNMENT. ONCE SHARE S ARE SPECIFICALLY COVERED BY INDEXATION OF COSTS, AND UNLESS THERE IS A SPECIFIC EXCLUSION CLAUSE FOR PREFERENCE SHARES, IT CANNOT BE OPEN TO THE ASSESSING OFFICER TO DECLINE INDEXATION BENEFITS TO PREFERENCE SHARES. WE UPHOLD THE PLEA OF THE ASSESSEE, AND DIRECT THE ASSESSING OFFICER TO GRANT INDEXATIO N IN THE COMPUTATION OF CAPITAL GAINS, AS IS THE SCHEME OF THE ACT. THE ASS ESSEE GETS THE RELIEF ACCORDINGLY. ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 8 OF 11 15. GROUND NO. 5 IS THUS ALLOWED. 16. IN GROUND NO. 6, THE ASSESSEE IS AGGRIEVED THAT TH E LD CIT (A) ERRED IN INCREASING RS 2,92,593 UNDER CLAUSE (F) TO EXPLANAT ION 1 TO SECTION 115JB. 17. THE CIT(A) HAS CONFIRMED THIS ADJUSTMENT FOR TH E SHORT REASON THAT THE DISALLOWANCE UNDER SECTION 14A FOR RS 2,92,593 HAS BEEN CONFIRMED BY HIM. FOR THIS SHORT REASON, AND OUR HAVING DELETED THE I MPUGNED DISALLOWANCE, THE VERY FOUNDATION OF IMPUGNED DISALLOWANCE CEASES TO HOLD GOOD IN LAW. WE NEED NOT GO ANY FURTHER THAN THAT AND DELETE THIS A DJUSTMENT AS WELL. 18. GROUND NO. 6 IS THUS ALLOWED. 19. IN GROUND NO. 7, THE ASSESSEE HAS RAISED THAT T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT REDUCING RS 25 ,34,023 FROM THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT AS PER CLAUSE (III) TO EXPLANATION 1 TO SECTION 115 JB. 20. AS FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CO NCERNED, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT IN THE IMPUGNED ORDER TH E CIT(A) HAS REJECTED ALL THE CONTENTIONS OF THE ASSESSEE RATHER SUMMARILY BY TREATING THE ISSUE AS COVERED AGAINST THE ASSESSEE BY RULING GIVEN BY THE AUTHORITY FOR ADVANCE RULING IN THE CASE OF RASHTRIYA ISPAT NIGAM LIMITED (285 ITR 1). LEARNED COUNSEL DOES NOT DISPUTE THAT THE ISSUE BEFORE THE HONBLE AUTHORITY FOR ADVANCE RULING WAS THE SAME AS IN THIS CASE, BUT HE POINTS OUT THAT IT IS ONLY ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 9 OF 11 ELEMENTARY THAT ADVANCE RULINGS, DESPITE THEIR PERS UASIVE VALUE AND RESPECT, DONOT BIND A JUDICIAL AUTHORITY. IT IS ALSO POINTED OUT THAT CERTAIN ASPECTS OF THE MATTER, WHICH ARE CRUCIAL TO DETERMINATION OF L EGAL ISSUES, DID NOT COME UP FOR CONSIDERATION BEFORE HONBLE AAR. OUR ATTENTION IS ALSO INVITED TO THE BINDING JUDICIAL PRECEDENTS, SUCH AS IN THE CASE OF AMLINE TEXTILE PVT LTD VS ITO (27 SOT 152), WHICH HAVE NOT BEEN CONSIDERED AT ALL BY THE CIT(A). LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, SUBMITS THAT THE RATIO OF HONBLE AAR RULING DESERVES UTMOST RESPECT AND CONSIDERATION. 21. IT IS, HOWEVER, ONLY ELEMENTARY A RULING GIVEN BY THE AUTHORITY FOR ADVANCE RULING IS NOT EVEN BINDING ON THE COMMISSIO NER OF INCOME-TAX, AND AUTHORITIES SUBORDINATE THERETO, IN ANY CASE EXCEPT IN THE CASE OF THE VERY ASSESSEE IN WHICH THE SUCH A RULING IS GIVEN AND EV EN IN SUCH A CASE IT IS BINDING IN RESPECT OF TRANSACTION IN RESPECT OF WHI CH THE RULING IS GIVEN. WHATEVER BE THE RESPECT AND DEFERENCE JUDICIAL AUTH ORITIES INDEED HAVE FOR THE RULINGS GIVEN BY THE AUTHORITY, THE AUTHORITY F OR ADVANCE RULING, NOT BEING A PART OF THE JUDICIAL HIERARCHY, CANNOT LAY DOWN A BINDING PRECEDENCE FOR ANYONE - THE REVENUE, THE ASSESSEES OR THE APPE LLATE AUTHORITIES. WHILE THE RULING INDEED DESERVES HIGHEST RESPECT AND CONS IDERATION, IT CANNOT BE OPEN TO ANYONE TO TREAT THIS AS A BINDING JUDICIAL PRECEDENT. IF THERE IS SOMETHING WHICH HAS NOT BEEN CONSIDERED IN THE PROC ESS OF ARRIVING AT THEIR CONCLUSIONS IN THE RULING, THE SAME HAS TO BE CONSI DERED AND ADJUDICATED UPON. IT IS IN SHARP CONTRAST WITH THE BINDING JUDI CIAL RULINGS WHICH ARE BINDING EVEN IF THE RULINGS HAVE NOT DEALT WITH A P ARTICULAR ARGUMENT IS RAISED LATER. AS LAID DOWN BY THE APEX COURT IN THE CASE OF AMBIKA PRASAD MISHRA V. STATE OF U.P. AIR 1980 SC 1762; [1980] 3 SCC 719 (PAGE 1764 OF AIR 1980 SC), EVERY NEW DISCOVERY NOR ARGUMENTATIV E NOVELTY CANNOT UNDO OR COMPEL RECONSIDERATION OF A BINDING PRECEDENT... .A DECISION DOES NOT LOOSE ITS AUTHORITY MERELY BECAUSE IT WAS BADLY ARGUED, I NADEQUATELY CONSIDERED OR ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 10 OF 11 FALLACIOUSLY REASONED..... THIS PRINCIPLE, HOWEVER , WOULD NOT APPLY TO AN AAR RULING, AND THEREFORE, THE CIT(A) WAS REQUIRED TO D EAL WITH ALL THE CONTENTIONS OF THE ASSESSEE, AND IT WAS NOT OPEN TO THE CIT(A) TO SIMPLY BRUSH THEM ASIDE ON THE GROUND THAT THE ISSUE IS CO VERED AGAINST THE ASSESSEE BY AN AAR RULING. THE CIT(A) WAS, THEREFOR E, CLEARLY MISGUIDED IN TREATING THE MATTER AS COVERED AGAINST THE ASSESSEE BY THE AAR RULING. HE OUGHT TO HAVE DECIDED THE MATTER ON MERITS AND BY W AY OF A SPEAKING ORDER DEALING WITH ALL THE CONTENTIONS OF THE ASSESSEE BY WAY OF A SPEAKING ORDER. 22. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FI T AND PROPER TO REMIT THE MATTER TO THE FILE OF THE CIT(A) FOR ADJUDICATION DE NOVO IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER, AFTER GIVING A SSESSEE YET ANOTHER OPPORTUNITY OF HEARING TO THE ASSESSEE AND DEALING WITH SPECIFIC CONTENTIONS RAISED BY THE ASSESSEE. WE DIRECT SO. 23. GROUND NO. 7 IS THUS ALLOWED FOR STATISTICAL PU RPOSES IN THE TERMS INDICATED ABOVE. 24. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 8 TH DAY OF APRIL, 2011. SD/- SD/- (D K AGARWAL ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI; 8 TH DAY OF APRIL , 2011 . ITA NO.2071/ MUM/2009 ASSESSMENT YEAR: 2005- 06 PAGE 11 OF 11 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT , MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, C BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI