ACIT, New Delhi V. M/s. Pawan Hans Helicopters Ltd, New Delhi

ITA 2843/DEL/2009

• Counselvise Citation: 284320114 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 11-06-2009

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI F BENC H BEFORE SHRI U.B.S. BEDI, JM & SHRI A.N. PAHUJA, AM ITA NO.2843/DEL./2009 ASSESSMENT YEAR: 2003-04 ASSISTANT C.I.T.,CIRCLE-14(1), ROOM NO. 415,4 TH FLOOR,CR BUILDING,NEW DELHI V/S . M/S PAWAN HANS HELICOPTERS LTD., CORPORATE OFFICE, SAFDARJUNG AIRPORT, NEW DELHI [PAN: AAACP 1561 A] (APPELLANT) (RESPONDENT) ASSESSEE BY MS. JYOTI NARULA, AR REVENUE BY SHRI SUDESH GARG, DR DATE OF HEARING 18-01-2012 DATE OF PRONOUNCEMENT 18-01-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 11.06.2009 BY THE REVENUE AGAI NST AN ORDER DATED 16.03.2009 OF THE LEARNED CIT(A)-XVII, NEW DE LHI, RAISES THE FOLLOWING GROUNDS:- 1. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS O F THE CASE IN DELETING THE ADDITION OF ` `11,88,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OF PROVISION FOR REVISION O F PAY AND ALLOWANCES OF PILOTS PENDING FINALIZATION OF SETTLEMENT. 2. THAT APPELLANT CRAVES TO BE ALLOWED TO AMEND, DE LETE OR ADD ANY OTHER GROUNDS OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT , 1961 (HEREAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 30.12.2004, DETERMININ G INCOME OF ` `28,28,40,870/-. SUBSEQUENTLY, AFTER RECORDING REASONS, IN WRITING, THE ASSESSING OFFICER (A.O. IN SHORT) REOPENED THE ASSESSMENT U/S 147 OF THE ACT W ITH THE SERVICE OF A NOTICE DATED 28.01.2008 U/S 148 OF THE ACT. DURING THE CO URSE OF REASSESSMENT ITA NO.2843/DEL./2009 2 PROCEEDINGS, THE AO ASKED THE ASSESSEE AS TO WHY TH E PROVISION OF ` `11.88 CRORE ON ACCOUNT OF REVISION OF PAY AND ALLOWANCES OF PI LOTS, PENDING FINALIZATION OF SETTLEMENT BE NOT DISALLOWED. THE ASSESSEE REPLIED THAT PROVISION AMOUNTING TO ` `11.88 CRORE FOR THE FINANCIAL YEAR 2002-03 WAS TOW ARDS REVISION OF PAY AND ALLOWANCES, WHICH WAS DUE AND ACCRUED FROM 1 ST JANUARY, 1997 ON SIMILAR LINE AS PER THE 5 TH PAY COMMISSION FOR CENTRAL GOVT. EMPLOYEES AS WELL PSUS IN WHICH THE REVISION TREND WAS CHANGED OVER FROM EVERY 5 YE ARS TO EVERY 10 YEARS FROM THE EARLIER WAGE REVISION AND WAS MADE EFFECTIVE FR OM 01.1.1992 TO 31.12.1996. AN ESTIMATED PROVISION OF 35% INCREASE IN WAGES WAS MADE OVER THE ACTUAL EXPENDITURE. HOWEVER, LATER BASED ON THE PAY COMMI SSION REPORT FOR PSUS AND NEGOTIATIONS HELD WITH DIFFERENT WORKERS UNIONS, PI LOTS AND ENGINEERS GUILDS, THE PAY AND ALLOWANCES HAD BEEN REVISED W.E.F. 1.1.97 I N THE FINANCIAL YEAR 2002-03 AND 2003-04, WHICH HAD NET IMPACT OF 55% INCREASE A S AGAINST PROVISION OF 35% OVER OLD PAY AND ALLOWANCES. THE SAID PROVISION MA DE WAS VIRTUALLY LOWER THAN ACTUAL PAYMENTS MADE DURING THE SUBSEQUENT FINANCIA L YEAR. THE LEGITIMATE ARREARS FOR PAY AND ALLOWANCE DUE UPON REVISION COU LD NOT BE DENIED AGAINST WHICH THE ACTUAL PAYMENTS WERE MADE SUBSEQUENTLY IN VIEW OF THE SETTLEMENT ARRIVED AT BETWEEN THE DIFFERENT WORKERS UNIONS, PI LOTS GUILDS, ENGINEERS GUILD AND EXECUTIVE ASSOCIATIONS IN ACCORDANCE WITH THE DIREC TIONS AND THE GUIDELINES ISSUED BY THE DEPARTMENT OF PUBLIC ENTERPRISES VIDE THEIR ORDER NO. DPE O.M. NO.2(49)/98-DPE(WC) DATED 25 TH JUNE, 1999 AND DPE O.M. NO.2/11/96- DPE(WC)-GL-1 DATED 11 TH FEB, 2004 AND THE APPROVAL OF BOARD OF DIRECTORS O F THE COMPANY. SINCE THE COMPANY FOLLOWED THE MERCAN TILE SYSTEM OF ACCOUNTING, THE LIABILITY ,WHICH HAD THUS ACCRUED, HAD TO BE TAKEN INTO ACCOUNT WHILE WORKING OUT THE PROFITS AND GAINS OF THE BUSINESS, THE ASSE SSEE PLEADED. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE O N THE GROUND THAT PROVISION FOR REVISION OF PAY AND ALLOWANCES WAS AN UNASCERTA INED LIABILITY AND ACCORDINGLY, DISALLOWED THE CLAIM. ITA NO.2843/DEL./2009 3 3. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF HIS OWN ORDER DATED 15 TH JANUARY, 2009 IN APPEAL NO.51/07-08 FOR THE AY 2002-03, IN THE FOLLOWING TERMS:- 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ORDER OF THE ASSESSING OFFICER AND SUBMISSIONS MADE BY THE LEARN ED AR APPEARING FOR THE APPELLANT. I FIND THAT AN IDENTI CAL ISSUE WAS DECIDED BY ME IN FAVOUR OF THE APPELLANT IN MY ORDE R IN APPEAL NO.51/07-08 DATED 15.01.2009, WHEREIN IT WAS HELD T HAT THE PROVISIONS FOR REVISION OF PAY AND ALLOWANCES IS AN ASCERTAINED LIABILITY WHICH IS AN ALLOWABLE DEDUCTION. AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO TH E ONE DECIDED IN APPEAL NO.51/07-08, THE ADDITION MADE ON ACCOUNT OF PROVISION OF ` ` 11.88 CRORES TOWARDS PAY AND REVISIONS OF EMPLOYEES PENDING FINALIZATION OF REVISED PAY SCALE, IS HEREBY DELETE D. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT SIMILAR CLAIM IN THE AYS 1996-97 TO 2000-01 & AY 2004-05 WAS ALLOWED BY THE AO HIMSELF IN TERMS OF HIS ORDERS U /S 143(3) OF THE ACT. HOWEVER, IN THE AY 2001-02 AND 2002-03, THOUGH THE CLAIM WAS DISALLOWED BY THE AO, THE SAME WAS ALLOWED BY THE LD. CIT(A).SINCE THE REVENU E DID NOT PREFER ANY FURTHER APPEAL AGAINST THE FINDINGS OF THE LD.CIT(A) IN THE AYS. 2001-02 & 2002-03 AND IN THE YEAR UNDER CONSIDERATION, THE LD. CIT(A) MEREL Y FOLLOWED HIS OWN ORDER FOR THE AY 2002-03, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE, THE LD. AR ADDED. ON THE OTHER HAND, THE LD. DID NOT OPPOSE T HESE SUBMISSIONS OF THE LD. AR ON BEHALF OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. WE FIND THAT SIMILAR CLAIM FOR DEDUCTION OF PROVISION FOR REVISION OF PAY AND ALLOWANCES, PENDING FINALIZATION OF SETTLEMENT ,WAS ALLOWED BY THE AO HIMSELF IN THE AYS 1996-97 TO 2000-01 AS ALSO IN THE AY 2004 -05 AND BY THE LD. CIT(A) IN THE AYS 2001-02 AND 2002-03. INDISPUTABLY, THE REVE NUE HAVE ACCEPTED THE FINDINGS OF THE LD. CIT(A) IN THESE TWO ASSESSMENT YEARS. THOUGH THE PRINCIPLE OF RES JUDICATA HAS NO APPLICATION TO PRO CEEDINGS UNDER THE ACT AND THE FINDINGS REACHED FOR ONE PARTICULAR ASS ESSMENT YEAR ITA NO.2843/DEL./2009 4 CANNOT BE HELD TO BE BINDING IN THE ASSESSMENT PROC EEDINGS FOR A SUBSEQUENT YEAR, BUT THIS GENERAL RULE IS SUBJECT T O THE QUALIFICATION THAT A FINDING REACHED IN THE ASSESSMENT PROCEEDING S FOR AN EARLIER YEAR WOULD NOT BE REOPENED IN A SUBSEQUENT YEAR IF IT IS NOT ARBITRARY OR PERVERSE, HAS BEEN ARRIVED AT AFTER DUE ENQUIRY AND IF NO FRESH FACTS ARE FOUND IN THE SUBSEQUENT ASSESSMENT YEAR. THIS IS ON THE PRINCIPLE THAT THERE SHOULD BE FINALITY AND CERTAIN TY IN ALL LITIGATIONS INCLUDING LITIGATIONS ARISING OUT OF THE ACT [SEE B URMAH-SHELL REFINERIES LTD. V. G. B. CHAND [1976] 61 ITR 493 (B OM) AND CIT V. DALMIA DADRI CEMENT LTD. [1970] 77 ITR 410 (P & H)] . IN THE INSTANT CASE, NO FRESH MATERIAL WAS BROUGHT IN THE ASSESSM ENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION AND THE LD. CIT(A) MERELY FOLLOWED HIS OWN ORDER FOR THE AY 2002-03 WHILE ALLOWING T HE CLAIM. IN THE CASE OF TARABEN RAMANBHAI PATEL [1995] 215 ITR 323 (GUJ),HONBLE HIGH COURT OBSERVED THAT IT IS NO DOUBT TRUE THAT T HE STRICT RULE OF THE DOCTRINE OF RESJUDICATA DOES NOT APPLY TO PROCEEDIN GS UNDER THE ACT, AT THE SAME TIME, IT IS EQUALLY TRUE THAT UNLESS TH ERE IS A CHANGE OF CIRCUMSTANCES, THE AUTHORITIES WILL NOT DEPART FROM PREVIOUS DECISIONS AT THEIR SWEET WILL IN THE ABSENCE OF MAT ERIAL CIRCUMSTANCES OR REASONS FOR SUCH DEPARTURE. THE HO N'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG V. CIT [199 2] 193 ITR 321 HAS APPROVED THE PRINCIPLE OF CONSISTENCY, WHEN THE Y OBSERVED THAT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE D IFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITION TO BE SU STAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. THOUGH THE PRINCIPLE OF RES- JUDICATA IS NOT APPLICABLE IN THE INCOME-TA X MATTER, BUT FINDINGS OF EARLIER YEARS ON THE SAME MATTER ARE RE LEVANT AS PER THE RATIO LAID DOWN IN SARDAR KEHAR SINGH V. CIT [1992] 195 ITR 769 (RAJ), TARABEN RAMANBHAI PATEL V. ITO [1995] 215 IT R 323 (GUJ) ITA NO.2843/DEL./2009 5 AND CIT V. HINDUSTHAN MOTORS LTD. [1991] 192 ITR 61 9 (CAL). EARLIER HONBLE APEX COURT IN PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) OBSERVED : 'AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PAR TICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SP HERES OF HUMAN ACTIVITY.' 5.1 HONBLE DELHI HIGH COURT IN A.R.J. SECURITY PRINTERS' CASE [2003] 264 ITR 276 AND CIT V. NEO POLY PACK P. LTD. [2000] 245 ITR 492 (DELHI), HELD THAT EVEN WHEN THE DOCTRINE OF RE S JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, WHERE AN ISSUE HAS BEEN DECIDED CONSISTENTLY IN A PARTICULAR MANNER FOR EAR LIER ASSESSMENT YEARS, THE SAME VIEW SHOULD PREVAIL EVEN DURING THE SUBSEQUENT YEARS UNLESS THERE IS A MATERIAL CHANGE IN THE FACT S. THE LAW IS, THEREFORE, FAIRLY WELL SETTLED. FOR REJECTING THE V IEW TAKEN FOR THE EARLIER ASSESSMENT YEARS, THERE MUST BE A MATERIAL CHANGE IN THE FACT SITUATION. THERE IS NO GAINSAYING THAT THE PRE VIOUS VIEW WILL HAVE NO APPLICATION EVEN IN CASES WHERE THE LAW ITS ELF HAS UNDERGONE A CHANGE BUT BEFORE AN EARLIER VIEW CAN B E UPSET OR DIGRESSED FROM, ONE OF THE TWO MUST BE DEMONSTRATED , NAMELY, A CHANGE IN THE FACT SITUATION OR A MATERIAL CHANGE I N LAW WHETHER ENACTED OR DECLARED BY THE SUPREME COURT. IN THE I NSTANT CASE, THE LD. CIT(A) FOLLOWED HIS OWN DECISION FOR THE AY 2002-03 IN ALLOWING THE CLAIM, WHICH DECISION HAS BEEN ACCEPTE D BY THE REVENUE. IN THE ABSENCE OF MATERIAL CHANGE IN FACT S OR ANY ADDITIONAL INPUT, THERE IS NO COMPELLING REASON FOR TAKING A DIFFERENT VIEW. 5.2 IN VIEW OF THE FOREGOING, ESPECIALLY WHEN FA CTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE I NDISPUTABLY, ITA NO.2843/DEL./2009 6 PARALLEL TO THE FACTS AND CIRCUMSTANCES OBTAINING I N THE AYS 1996-07 TO 2002-03 & AY 2004-05 WHILE THE LD. DR DID NOT PL ACE BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). T HEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGLY TH IS GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (U.B.S. BEDI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSTT. C.I.T., CIRCLE 14(1), NEW DELHI. 2.M/S PAWAN HANS HELICOPTERS LTD., CORPORATION OFFI CER, SAFDARJUNG AIRPORT, NEW DELHI 3. CIT(A)-XVII, NEW DELHI. 4. CIT CONCERNED. 5. DR, ITAT,F BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT