Commissioner of Income-tax Vs. Electro Steelcastings Ltd. - Court Judgment

Excerpt:
head note: income tax assessment--draft assessment - sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the non obstante clause. the legislative intention is thus very clear that the law enacted shall have full operation and there would be no impediment. it is well settled that the definition of judgment in section 2(9) of c.p.c., is much wider and more liberal, intermediary or interlocutory judgment fall in the category of orders referred to clause (a) to (w) of order 43, rule 1 and also such other orders which poses the characteristic and trapping of finality and may adversely affect a valuable right of a party or decide an important aspect of a trial in an ancillary proceeding. amended section 100-a of the code clearly stipulates that where any appeal from an original or appellate decree or order is heard and decided by a single judge of a high court, no further appeal shall lie. even otherwise, the word judgment as defined under section 2(9) means a statement given by a judge on the grounds of a decree or order. thus the contention that against an order passed by a single judge in an appeal filed under section 104 c.p.c., a further appeal lies to a division bench cannot be accepted. the newly incorporated section 100a in clear and specific terms prohibits further appeal against the decree and judgment or order of a single judge to a division bench notwithstanding anything contained in the letters patent. the letters patent which provides for further appeal to a division bench remains intact, but the right to prefer a further appeal is taken away even in respect of the matters arising under the special enactments or other instruments having the force of law be it against original/appellate decree or order heard and decided by a single judge. it has to be kept in mind that the special statute only provide for an appeal to the high court. it has not made any provision for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a proceeding under a special act. sections 100-a [as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in exercising powers of superintendence under article 227 of the constitution. - ratio & held :tribunal was justified in holding that a lump sum payment for obtaining technical know-how regarding production of grinding media and other associated parts as well as vertical shaft mills, rings and rollers can be treated as revenue expenditure to be allowed as deduction.order under s. 144b--limitation.ratio & held :though direction to forward draft order under s. 144b for asst. yr. 1979-80 was made on 16-3-1982, yet it was actually despatched on 8-4-1982, as such assessment made in september 1982 was barred by limitation as a direction to send or despatch, without the act being actually carried on cannot constitute forwarding. case law analysiscit v. om agencies (1994) 207 itr 794 (ori) followed. applicationnot to current assessment years.a. y.1979-80dt. judg.7-7-1995income tax act 1961 s.144bincome tax act 1961 s.153(1)income tax act 1961 s.153(3)capital or revenue expenditure--technical know-how fees--lump sum payment.ratio & held :tribunal was justified in holding that a lump sum payment for obtaining technical know-how regarding production of grinding media and other associated parts as well as vertical shaft mills, rings and rollers can be treated as revenue expenditure to be allowed as deduction. application :also to current assessment years. case law analysis :alembic chemical works co. ltd. v. cit (1989) 177 itr 377 (sc) followed. income tax act 1961 s.37(1) capital or revenue expenditure--tests--`once for all payment' and `enduring benefit'.ratio & held :the idea of 'once for all' payment and 'enduring benefit' are not to be treated as something akin to statutory conditions, nor are the notions of 'capital' or 'revenue' a judicial fetish. what is capital expenditure and what is revenue are not eternal varieties but must need be flexible so as to respond to the changing economic realities of business. the expression 'asset or advantage of an enduring nature' was evolved to emphasise the element of a sufficient degree of durability appropriate to the context. there is also no single definitive criterion which by itself is determinative whether a particular outlay is capital or revenue. the 'once for all' payment test is also inconclusive. what is relevant is the purpose of the outlay and its intended object and effect, considered in a commonsense way having regard to the business realities. in a given case, the test of 'enduring benefit' might break down. case law analysis :alembic chemical works co. ltd. v. cit (1989) 177 itr 377 (sc) followed.application :income tax act 1961 s.37(1)

Judgment:
ORDER

UNDER S. 144B--Limitation.

Ratio & Held :

Though direction to forward draft order under s. 144B for asst. yr. 1979-80 was made on 16-3-1982, yet it was actually despatched on 8-4-1982, as such assessment made in September 1982 was barred by limitation as a direction to send or despatch, without the act being actually carried on cannot constitute forwarding.

Case Law Analysis

CIT v. Om Agencies (1994) 207 ITR 794 (Ori) followed.

Application

Not to current assessment years.

A. Y.

1979-80

Dt. Judg.

7-7-1995

Income Tax Act 1961 s.144B

Income Tax Act 1961 s.153(1)

Income Tax Act 1961 s.153(3)

Capital or revenue expenditure--TECHNICAL KNOW-HOW FEES--Lump sum payment.

Ratio & Held :

Tribunal was justified in holding that a lump sum payment for obtaining technical know-how regarding production of grinding media and other associated parts as well as vertical shaft mills, rings and rollers can be treated as revenue expenditure to be allowed as deduction.

Application :

Also to current assessment years.

Case Law Analysis :

Alembic Chemical Works Co. Ltd. v. CIT (1989) 177 ITR 377 (SC) followed.

Income Tax Act 1961 s.37(1)

Capital or revenue expenditure--TESTS--`Once for all payment' and `enduring benefit'.

Ratio & Held :

The idea of 'once for all' payment and 'enduring benefit' are not to be treated as something akin to statutory conditions, nor are the notions of 'capital' or 'revenue' a judicial fetish. What is capital expenditure and what is revenue are not eternal varieties but must need be flexible so as to respond to the changing economic realities of business. The expression 'asset or advantage of an enduring nature' was evolved to emphasise the element of a sufficient degree of durability appropriate to the context. There is also no single definitive criterion which by itself is determinative whether a particular outlay is capital or revenue. The 'once for all' payment test is also inconclusive. What is relevant is the purpose of the outlay and its intended object and effect, considered in a commonsense way having regard to the business realities. In a given case, the test of 'enduring benefit' might break down.

Case Law Analysis :

Alembic Chemical Works Co. Ltd. v. CIT (1989) 177 ITR 377 (SC) followed.

Application :

Income Tax Act 1961 s.37(1)