2014 (7) TMI 1285 - HC - Income Tax

Deduction on account of payments made to the retired partners under the provisions of the partnership deed - Constitution of income of firm - Held that - Issue is squarely covered in favour of the Assessee and against the Revenue by the judgment and order of this Court dated 25.07.2008 in the case of Commissioner of Income Tax v/s M/s C.C. Chokshi & Company 2008 (7) TMI 1055 - BOMBAY HIGH COURT . We have been shown another order following this judgment and delivered in relation to the same Assessee/ M/s A.F. Ferguson and Company. 2012 (1) TMI 357 - BOMBAY HIGH COURT . We are of the opinion that simple answer to this contention is that so long as the judgment delivered by this Court and which is final is not set aside by the higher court, it continues to bind us. That appeal is filed against that judgment and which appeal is pending, is no answer. We will go by the binding principle and judicial discipline. In doing so we would be upholding the rule of consistency.

Summary

Issues:
1. Whether the question projected as a substantial question of law is identical to the one dealt with in a previous order.
2. Whether the judgment in a previous case is binding on the current case despite an appeal pending in the Supreme Court.

Analysis:

1. The High Court considered whether the substantial question of law raised in the current case was identical to the one addressed in a previous order related to the same Assessee. The Court noted that the Division Bench had already ruled in favor of the Assessee in a judgment dated 25.07.2008 in a case involving M/s C.C. Chokshi & Company. Another order delivered in 2012 also favored the Assessee. The Court emphasized the importance of consistency and precedent in such matters.

2. The Court addressed the argument put forth by the Revenue that an appeal had been filed in the Supreme Court against the judgment favoring the Assessee in the previous case. The Revenue contended that this appeal being pending meant that the question was still open. However, the Court held that until a higher court sets aside a final judgment, it remains binding. The Court emphasized the principle of judicial discipline and consistency in upholding previous decisions.

3. Ultimately, the Court concluded that since the current Appeal did not raise any substantial question of law and the previous judgment in favor of the Assessee remained final until set aside by a higher court, the Appeal was dismissed. The Court highlighted that the pendency of an appeal did not negate the binding nature of the existing judgment, and adherence to established legal principles was crucial in maintaining consistency in decisions. No costs were awarded in this matter.