Judgment

SIKRI, C.J.I. :- (on behalf of self, A. N. Grover, J., A. N,. Ray, J. and D. G. Palekar, J.): These appeals have been referred by a Division Bench of this Court to a larger Bench as the Division Bench felt that the decision of this Court in Travancore Titanium Product Ltd. v. Commr. of Income-tax (1966) 3 SCR 321 might require reconsideration. The only point involved in these appeals is whether the Wealth Tax paid by the assessee, a trading company, is deductible as an expenditure under S. 10 (1) and S. 10 (2) (xv) of the Income-tax Act, 1922. The facts in both the appeals are similar. They relate to two separate accounting and assessment years and two assessment orders have been challenged. We may give a few facts in one appeal. The Indian Aluminium Co. Ltd., in respect of the year of assessment 1959-60 (accounting period Calendar year 1958), paid Rs. 1,59,630/- as Wealth Tax and claimed to deduct this amount as expense from their assessable income. The Income Tax Officer allowed the deduction but the Appellate Assistant Commissioner held that the Company was not entitled to the deduction of Wealth Tax as an expense. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner. On the application of the assessee, the following question was referred to the High Court:

"Whether on the facts and circumstances of case, the sum of Rupees 1,59,630/- paid by the assessee as wealth-tax was legally deductible as a business expense in computing the assessee income from business?

2. The High Court, following the decision of this Court in Travancore Titanium case, (1966) 3 SCR 321 answered the question against the assessee, Having obtained certificate of fitness from the High Court, the assessee has appealed to us.

3. Basing himself on Keshav Mills Co. Ltd. v. Commr. of I. T. (1965) 2 SCR 908 at p. 922 it was contended by the learned counsel for the Revenue that we should not review our decision in Travancore Titanium case, (1966) 3 SCR 321 . Gajendragadkar, C. J., speaking for the Court, had observed in that case that "it is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. He further observed:

"It would always depend upon several relevant considerations:- What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion did some patent aspects of the question remain unnoticed or was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the Court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the General administration of law or on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief?

We are inclined to review our earlier decision in Travancore Titanium case, (1966) 3 SCR 321 because, as will presently appear certain aspects of the question were not brought to the attention of the Court and remained unnoticed, and our decision is not likely cause any public inconvenience, hardship or mischief. We are all of the opinion that the decision was erroneous. The decision will affect numerous assessees. In the circumstances we think we should review the decision.

4. Section 10 (1) of the Indian Income-Tax Act, 1922, reads :

"10 (1) The tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him."

Section 10 (2) provides :

"Such profits or gains shall be computed after making the following allowance