1996 (2) TMI 54 - HC - Income Tax

Summary

Issues:
1. Interpretation of the decision in Princess Usha Trust v. CIT [1983] 144 ITR 808.
2. Validity of the appeals filed by the Department before the Tribunal.
3. Consideration of cross-objections by the Tribunal.
4. Relevance of special leave petition filed by the Department before the Supreme Court.
5. Application of legal principles in directing reference under section 256(1) of the Income-tax Act, 1961.
6. Dismissal of applications under section 256(2) of the Act.

Analysis:

1. The judgment pertains to applications under section 256(2) of the Income-tax Act, 1961, connected to the decision in Princess Usha Trust v. CIT [1983] 144 ITR 808. The trust in question was created by Maharaja Yeshwantrao Holkar, and the court previously held that the trust stood extinguished due to the transfer of beneficial interest by Maharani Usha Devi. Consequently, the Commissioner of Income-tax (Appeals) canceled assessments for specific years. The Department's appeals before the Tribunal were dismissed based on the High Court's decision.

2. The Tribunal dismissed the Department's appeals, noting that the trust was extinguished per the High Court's judgment. The Department's appeals were seen as an attempt to keep the matter alive pending a special leave petition before the Supreme Court. The Tribunal found no merit in the appeals and upheld the cancellation of assessments made by the Commissioner of Income-tax (Appeals).

3. The assessee filed cross-objections challenging the quantum of assessment of income. However, since the assessments were canceled by the Commissioner of Income-tax (Appeals) and upheld by the Tribunal, the cross-objections were deemed unnecessary and dismissed.

4. The applicant argued that the special leave petition filed by the Department before the Supreme Court against the High Court's decision in Princess Usha Trust v. CIT [1983] 144 ITR 808 was crucial to the Tribunal's orders. However, the court held that the pendency of the same issue before the Supreme Court did not warrant a reference under section 256(1) of the Act.

5. The court cited previous decisions to establish that the filing of a special leave petition in the Supreme Court from the High Court's decision was not sufficient grounds to direct a reference. The court emphasized that the point of controversy had been settled by previous decisions, and no referable question of law arose from the Tribunal's orders.

6. Ultimately, the court found the applications under section 256(2) of the Act devoid of merit and dismissed them. The applicant was granted the freedom to pursue appropriate remedies when necessary and permissible under the law. The applications were dismissed without any order as to costs, and counsel fees were fixed for each side.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the court's reasoning in reaching its decision.