THE HON’BLE SRI JUSTI CE P.SAM KOSHY AND THE HON’BLE SRI JUSTI CE NARSI NG RAO NANDI KONDA I NCOME TAX TRI BUNAL APPEAL No.208 of 2008; I NCOME TAX TRI BUNAL APPEAL No.151 of 2010;

AND I NCOME TAX TRI BUNAL APPEAL No.152 of 2010

COMMON JUDGMENT

(per the Hon’ble Sri Justice P.Sam Koshy)

Since the issue involved in these three appeals and the question of law raised also being the same, they are decided by this common judgment.

2. Heard Mr. A.V.A. Siva Kartikeya, learned counsel, representing Mr. A.V. Krishna Koundinya, learned counsel for the appellants/ assessee, and Ms. K. Mamata, learned Standing Counsel for Income Tax Department, representing Mr. B. Narasimha Sarma, learned counsel for respondent.

3. I.T.T.A.No.208 of 2008 is filed under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) assailing the order dated 19.12.2007 in ITA.No.1107/Hyd/2007 passed by the Income Tax Appellate Tribunal (for short, the ‘ITAT’) for the assessment year 2000- 01. I.T.TA.No.151 of 2010 and I.T.T.A.No.152 of 2010 are also filed under Section 260A of the Act assailing the orders dated 08.08.2008 in ITA.No726/Hyd/2006 & ITA.No.59/Hyd/2008 passed by the ITAT for the assessment years 2003-04 and 2004-05 respectively.

4. For convenience, the facts in I.T.T.A.No.208 of 2008 are discussed herein.

5. The substantial question of law raised by the appellant is “whether the order of the Assessing Officer which has been confirmed by the Commissioner of Income Tax (Appeals)-I, Hyderabad, as also by that of ITAT to the effect of refusing to deduct financial charges to the tune of Rs.15,01,600/- from the estimated income was proper, legal and justified?”

6. The brief facts of the case are that the Assessing Officer completed the assessment in respect of the appellant for the assessment year 2000-01 determining the total income including income from contracts. The income from contracts was estimated at 12% after invoking Section 145 of the Act subject to allowing depreciation and other statutory allowances as agreed to by the authorized representative at the time of hearing before the Assessing Officer itself. During the course of proceedings, the Assessing Officer allowed the depreciation claim of the appellant while computing the income. After the Assessing Officer completed the assessment proceedings and passed the assessment order, the appellant filed an application under Section 154 of the Act seeking for rectification of the assessment order so for as deduction of financial charges to the tune of Rs.15,01,600/- from the estimated income. The said application filed under Section 154 of the Act was rejected by the Assessing Officer. The matter was thereafter taken to the Commissioner of Income Tax (Appeals), who in turn, confirmed the order of the Assessing Officer. Aggrieved, the appellant challenged the same before the ITAT. The ITAT also affirmed the orders passed by the Commissioner of Income Tax (Appeals) as also by the Assessing Officer, leading to filing of the present appeals.

7. Learned counsel for the appellants contended that the appellant is otherwise entitled for deductions those which are reflected under Section 30 to 38 of the Act. According to the learned counsel, the ITAT has erred in holding that the appellant is not entitled for the relief on the reliance of the past assessments having being done on the very same issue against the appellant, and the appellant has in fact not questioned the stand of the Department in respect of those assessments made in the past.

8. Learned counsel for the appellants relied upon the provisions of Section 154 of the Act and contended that once when an application under Section 154 of the Act for rectification is filed, the authority concerned ought to have taken up a more pragmatic and practical approach while granting deductions and there is no principle of res judicata applicable in tax laws and, therefore, each year’s assessment has to be taken up as a separate cause of action which the authorit