Commissioner of Income-tax Vs. Myul Chemicals Pvt. Ltd. - Court Judgment

Excerpt:
- code of civil procedure, 1908. order 37, rule 2: [f.i. rebello, smt v.k. tahilramani & a.s. oka, jj] maintainability of summary suit held, a written contract or a contract in writing need not always be a contract signed by both the parties and may consist of exchange of correspondence of a letter or letters written by one and assented to by the promisor without signature or even of a memorandum or printed document not signed by either party. a written contract therefore, need not be evidenced in a single document, written by the parties since the written document can be by exchange of documents in writing between the parties. on the other hand an implied contract would arise by the acts of parties to indicate an implied contract. a written contract, contemplated under order 37 need not be necessarily signed by both the parties. however, the writing must be such to arrive at a conclusion that an agreement certainly has been brought into existence and that the claim made under such an agreement ought to be indisputable. accounts stated which contains entries on both sides and parties who have stated the account between them have agreed that the items on one side should be set off against the items on the other side and the balance amount should be paid, would amount to a written contract for good consideration arising from the fact that the items have been so set off. such an account stated gives cause to a contract in writing on a fresh cause of action, with an implied promise to pay. a summary suit would not lie on a settled account which is not confirmed by the defendant and also on honoured cheque. requirements for a summary suit would be - (1) there must be a concluded contract; (2) the contract must be in writing and (3) the contract must contain an express or implied promise to pay. -- order 37, rule 2: summary suit -maintainability - term settled account or account stated- held, accounts stated which contains entires on both sides and parties who have stated the account between them have agreed that the items on one side should be set off against the items on the other side and the balance amount should be paid, would amount to a written contract for good consideration arising from the fact that the items have been so set off. such an account stated gives cause to a contract in writing on a fresh cause of action, with an implied promise to pay. -- order 37, rule 2: summary suit -maintainability - held, a written contract or a contract in writing need not always be a contract signed by both the parties and may consist of exchange of correspondence of a letter or letters written by one and assented to by the promisor without signature or even of a memorandum or printed document not signed by either party. a written contract therefore, need not be evidenced in a single document, written by the parties since the written document can be by exchange of documents in writitng between the parties. on the other hand an implied contract would arise by the acts of partiessto indicatean implied contract. a written contract, contemplated under order 37 need not be necessarily signed by both the parties. however, the writing must be such to arrive at a conclusion that an agreement certainly has been brought into existence and that the claim made under such an agreement ought to be indisputable. -- order 37, rule 2: summary suit -maintainability -implied term of a contract- expressions understand in mercantile trade or practice basedon usages and customs can be relied upon to consider whether thewritten contract contains sider whether the written contract contains an implied term to pay. -- order 37, rule 2: summary suit -held, a summary suit would not lie on a settled account which is not confirmed by the defendant and alsoon honoured cheque. -- order 37, rule 2 : summary suit -maintainability held, the requirements before a summary suit would lie are - (1) there must be a concluded contract; (2) the contractmust be in writing; and (3) the contractmust contain an express or implied promise to pay. there is no dispute in respect of the first two predicates. the only issue is in srespect of the third predicate. an implied contract is not a written contract. the question is whether a summary suit is maintainable on an implied term in a written contract with an implied term to pay. it is to be noted that the expression implied term is used in different senses. in some contract it would not depend on actual intention of the parties, but on a rule of law, such as the terms, warranties or conditions, which if not expressly excluded the law imports, as for instance under the sale of goods act, marine insurance act, master and servant and landlord and tenant.to imply a term in the contract as implied term, the test laid down by kim lewison ininterpretation of contract would be relevant. at the same time the court would have to note that the general presumption is, however, against the implying of terms into a written contract. it is, therefore, agains not possible to lay down a general rule as to when an implied term in a contract can be the subject matter of a summary suit. the issue in the instant case is limited to an implied promise to pay. that would necessarily depend on the facts of each case. -- order 37, rule2: summary suit on settled account duly confirmed by defendant - held, a summary suit on a settled account, duly confirmed by the defendant is maintainable as it is an acknowledgment by the defendant in the ledger in which mutual accounts have been entered and the accounts settled between them. such settling of accounts gives rise to a written contract on a fresh cause of action, with an implied promise to pay the amount settled. a summary suit would therefore, lie on settled accounts duly confirmed by the defendants. -- order 37, rule 2: summary suit maintainability acknowledgements, writing or receipts held, it is not possible to lay down any precise test as to when a summary suit would lie on an acknowledgments, acknowledgment,writing or receipt. document itself and practice, usage and customs of the trade and facts of case are relevant considerations. dr. b.p. saraf, j.1. by this reference under section 256(1) of the income-tax act, 1961, the income-tax appellate tribunal has referred the following question of law to this court for its opinion : 'whether, on the facts and in the circumstances of the case, the tribunal was right in law in holding that the assessee is entitled to challenge the computation of deficiency under section 80j for the earlier years of set-off ?' 2. the assessee is a private limited company and the assessment year is 1977-78. in the assessment for the immediately preceding assessment year, i.e., 1976-77, the income-tax officer had computed the deficiency under section 80j at a particular figure against which the assessee did not file any appeal. in the course of assessment proceedings for the year 1977-78, the assessee sought set-off of the deficiency for the assessment year 1976-77, not on the basis of the figure determined by the income-tax officer in the assessment for the assessment year 1976-77, but on some other basis. it was contended by the assessee that it was entitled to get redetermination of the deficiency for the assessment year 1976-77 even in the course of proceedings for the subsequent assessment year, viz., 1977-78, as the actual set-off was to be made in that assessment year only. the income-tax officer did not accept the contention of the assessee and allowed the assessee the set-off of deficiency on the basis of the figure determined in the proceedings for the assessment year 1976-77. the assessee appealed to the commissioner of income-tax (appeals) who upheld the order of the income-tax officer. on further appeal to the tribunal, the tribunal decided in favour of the assessee. it was held that the assessee was entitled to challenge the computation of the deficiency for the assessment year 1976-77 in the appeal for the subsequent year in which the set-off was sought for. hence this reference at the instance of the revenue. 3. we have perused the order of the tribunal. we find it difficult to uphold the finding of the tribunal. the deficiency related to the assessment year 1976-77 and was computed by the income-tax officer in the order of assessment for that assessment year. the amount of deficiency shown therein was the only amount which could be carried forward to be set off in the subsequent years in accordance with the law. if the assessee was in any way aggrieved with the computation or determination of the deficiency under section 80j, it could have taken appropriate remedy by way of appeal, revision, etc., against the order of assessment for the year 1976-77. having not done so, the assessment for that year became final and the amount determined by the income-tax officer cannot be challenged by the assessee in the course of assessment or appeal for the subsequent year. in the subsequent year, the assessee is only entitled to get set-off of the amount as determined by the income-tax officer for the earlier assessment year. 4. in view of the aforementioned position, we are of the clear opinion that the tribunal was in error in holding that the assessee is entitled to challenge the computation of deficiency under section 80j of the income-tax act, 1961, for the earlier years in a subsequent assessment year when set-off is given. the question referred to us is, therefore, answered in the negative, i.e., in favour of the revenue and against the assessee. 5. no order as to costs.