1. The High Court's decision relied exclusively on a precedent that was subsequently found to be per incuriam by a Division Bench. (Para 2 )
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1999 Supreme(SC) 375
SUPREME COURT OF INDIA
S.P. BHARUCHA AND R.C. LAHOTI, JJ.
M/s. N. J. Albert, Cochin, Appellant
VERSUS
Commissioner of Income Tax, Cochin, Respondent.
Civil Appeal No. 8469 of 1995, D/- 24-3-1999.
Important Points
The decision in a previous case was per incuriam and the reference should be heard and disposed of afresh.
Subject
Taxation Law - Income Tax
Act Referred
Income-tax Act, 1961: S.35-B(1)(b)(i)
Headnote
Weighted Deduction - Income Tax - The court answered the questions in the negative and in favor of the Revenue based on earlier decisions. The court held that the decision in a previous case was per incuriam and the reference should be heard and disposed of afresh.
Fact of the Case:
The High Court answered the questions in the negative and in favor of the Revenue based on its earlier decision. A Division Bench of the same High Court concluded that the earlier decision was per incuriam and the reference should be heard and disposed of afresh.
Finding of the Court:
The court found that the decision in a previous case was per incuriam and the reference should be heard and disposed of afresh.
Issues: Entitlement to weighted deduction, justification of services rendered by the Agent, entitlement to claim deduction for provision made for payment of leave with wages.
Ratio Decidendi: The decision in a previous case was per incuriam and the reference should be heard and disposed of afresh.
Final Decision: The reference should be restored to the file of the High Court to be heard and disposed of afresh. No order as to costs.
Legal Category Hierarchy
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taxation
-
income tax
-
deductions
- weighted deductions
- leave with wages
-
deductions
-
income tax
-
practice and procedure
-
judicial precedent
- per incuriam (Para 2)
-
judicial precedent
Table of Contents
2. A judgment based exclusively on a precedent determined to be per incuriam is bad in law. (Para 2 )
3. Reference restored to the High Court for fresh hearing and disposal. (Para 3 , 4 )
4. What is the legal consequence when a court relies exclusively on a precedent that is subsequently determined to be per incuriam?
A decision based exclusively on a precedent found to be per incuriam is held to be bad in law, necessitating a fresh hearing and disposal of the matter. (Para 2 , 3 )
5. What is the appropriate remedy when a High Court decision is found to be bad in law due to reliance on a per incuriam precedent?
The appropriate remedy is to restore the reference to the file of the High Court to be heard and disposed of afresh. (Para 3 )
Judgement
JUDGMENT :- The High Court answered the questions quoted below in the negative and in favour of the Revenue in the light of its earlier decision in I.T.R. Nos. 7 and 8 of 1982, Commissioner of Income-tax, Trivandrum v. M/s. C. Tharian and Sons, Cashew Exporters, Valakom, Kottarakkara, 166 ITR 607 : (1987 Tax LR 966).
1. Whether on the facts and in the circumstances of the case, the assessee is entitled to weighted deduction under clauses (i) and (ii) of Section 35-B (1) (b) of the Income-tax Act, 1961?
2. Whether on the facts and in the circumstances of the case the Tribunal is justified in holding that services rendered by the Agent, Nut Meat Trading Company, is not in connection with the distribution of the goods and is not the above finding wrong and unreasonable and based on conjectures and surmises?
3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that there are services rendered by the selling agent which come under sub-clauses (i) and (ii) of Section 35-B(1)(b). It is these services which are terminated only by the agents commission and are not the above findings wrong, unreasonable, perverse, based on surmises and baseless assertions?
4. Whether on the facts and in the circumstances of the case the assessee is entitled to claim deduction in respect of the provision made for payment of leave with wages?
2. In Commissioner of Income-tax v. Kerala Nut Food Co., (1991) 192 ITR 585, a Division Bench of the same High Court took note of a Circular of the Central Board of Direct Taxes and certain decisions and concluded, in our view, rightly, that the decision in M/s. C. Tharian and Sonss case was per incuriam. The answer by the High Court in the instant case of the question posed to it relying exclusively upon M/s. C. Tharian & Sonss case (1987 Tax LR 966) must, therefore, be held to be bad in law.
3. We think, in the circumstances, that the Reference (R.A. No. 257/Coch/81) should be restored to the file of the High Court to be heard and disposed of afresh. This shall be done expeditiously, having regard to the passage of time.
4. Order on the appeal accordingly. No order as to costs.
Order accordingly.
FOR CITATION AIR 2000 SC 1952
