MOST PREFERRED VIEW CAN BE ADOPTEDFOR EXPEDITIOUS JUSTICE- LARGER BENCHES GENERALLY CAUSE DELAY IN JUSTICE

[CA DEV KUMAR KOTHARI]

Important links and references:

Commissioner of Income-Tax Versus P. J. Chemicals Limited (And Other Appeals)1994 (9) TMI 1 – SUPREME COURT .

ACIT Vs. The General Fibre Dealers Ltd. 1993 (1) TMI 254 - ITAT KOLKATA

Supreme Courts view about most preferred view:

In case of P.J.Chemicals Ltd the Supreme Court considered the question about deductibility of subsidy from actual cost of plant and machinery. There were appeals by revenue against orders passed by large number of High Courts. There was appeal by assessee against judgment of Punjab and Hariyana High Court. In such situation the Supreme Court observed as follows:

             “On a consideration of the matter the view that commends itself as acceptable is the one which has commended itself to the majority of the High Courts. It is, of course, not the numerical strength that prevails--though the fact that a particular view has commended itself to a majority of the High Courts in the country is a matter for consideration--but the tensile strength of the acceptable logic in those decisions. It is aptly said that "a judge who announces a decision must be able to demonstrate that he began from recognized legal principles and reasoned in an intellectually coherent and politically neutral way to his result". In the present case the reasoning underlying, and implicit in, the conclusion reached by the majority of the High Courts cannot be said to be an unreasonable view and on a preponderance of preferability that view commends itself particularly in the context of a taxing statute. The expression "actual cost" needs to be interpreted liberally. The subsidy of the nature we are concerned with, does not partake of the incidents which attract the conditions for their deductibility from "actual cost".

The Government subsidy, it is not unreasonable to say, is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as or geared to a percentage of such cost. If that be so, it does not partake of the character of a payment intended either directly or indirectly to meet the "actual cost". We should prefer the reasoning of the majority of the High Courts to the one found acceptable by the High Court of Punjab and Haryana.

In the result, we affirm the judgments of the High Courts which have answered the question against the Revenue and dismiss the first batch of appeals and allow the second batch preferred by the assessee and in reversal of the opinion of the High Court, answer the question referred against the Revenue.”                              

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From above observations and order it is clear that a view expressed by majority of High Courts is more likely to be acceptable in comparison to opposite view expressed by a single High Court or few numbers of High Courts.

Views of judges can be considered- by number of judges following particular view:

The Supreme Court was considering large number of cases by revenue decided by High Courts against Revenue and a case of assessee decided by only one of High Court in favour of revenue. Therefore, the Supreme court considered numbers of High court. This concept can be extended for more refinement by considering number of judges who took particular view. And the majority view can be considered by benches.

Majority view can be considered instead of constitution of

third member bench, larger bench, or special bench:

It has been experienced that constitution of third member bench, larger bench, or special bench takes a long time in various procedures like request or recommendation for constitution of larger bench, constitution of larger bench and then hearing by larger bench. When a larger bench is constituted, generally other cases involving similar issue are kept pending. This causes delay in disposal of cases and increase pendency. It is experienced that cases are fixed by Registry offices and then counsels of concerned parties inform the bench about pendency of matter before Special Bench and therefore hearing is adjourned and case is kept pending for some time.

Author recall that in one of case decided on 29.01.1993 namely ACIT Vs. The General Fibre Dealers Ltd. 1993 (1) TMI 254 - ITAT KOLKATA argued by him and allowed in favour of his client holding that tea bush is plant eligible for depreciation and other allowances, when used as tool in business of cultivation and manufacture of tea. The issue was novel and came for first time for consideration of Tribunal. Therefore, in subsequent year, in the case of the same assessee, considering importance ( author would say just due to novelty of issue) a Special Bench of Tribunal was constituted. During pendency of hearing and disposal of case before the Special Bench, author himself had to seek adjournment in large number of cases and on large number of occasions.

When Special Bench was constituted and  matter was fixed for hearing, the author had to inform the Special Bench that the definition of ‘plant’ in section 43(3) has been amended and tea bushes have been excluded from the otherwise inclusive and very wide meaning of ‘plant’. Thus based on the amendment the Special Bench summarily dismissed the appeal.

This shows that in this case constitution of Special Bench itself was a reason to delay in rendering justice. When an appeal can be filed against decision of Tribunal or Court, irrespective of strength of members or judges constituting the bench, author feels that constitution of larger bench is not a wise administrative policy. When differences of vies have taken place, we know majority views taken by certain number of members or judges, therefore such majority view can preferably followed instead of constituting larger bench. Author also remember that in some cases Special Bench was constituted however, before disposal of matter by Special Bench the same issue was also considered and decided by some High Courts, therefore, the Special bench had to simply follow the judgment of High Court.

Thus instead of constituting special bench , most favoured view can be adopted and the Higher Court can be requested to decide the issue expeditiously and for that purpose the counsels can take effective steps for early hearing and decision.

Recent case on section 40(a)(ia):

As is popularly known in the case of Merlyin Shipping, Special Bench of ITAT has decided issue in favour of assessee holding that only sums payable on last day of previous year will attract disallowance u/s 40(a) (ia) in case tax was not deposited within prescribed limits. This view has been reversed by Calcutta High Court and Gujarat High Court. In this case also matters remained pending for long time. Then Tribunal followed decision of Special Bench. Now Courts and Tribunals are restoring similar matters to the AO or CIT(A) for decision afresh in light of judgments of High Court.

Now a detailed discussion is made about larger benches of Tribunal or Courts:  

Special or large benches of Tribunal and Court:

Special or large benches of the Supreme Court, High Courts and Tribunals are constituted when it is noticed that judges have differences of opinion. When two benches have different opinions, the matter can be referred to constitute larger bench called differently like ‘larger bench’ , ‘bench of three judges’,’ bench of five judges’ ‘special bench’ or ‘constitutional bench’ in different circumstances.

Third member bench:

When there is difference of opinion amongst two members or judges, the matter is referred to third member, and then matter is decided as per majority view.

Delay is caused due to larger bench:

Considerable delay is caused due to constitution of larger bench. First a proposal or recommendation is sent to the concerned judge – The Chief justice of India, The Chief Justice of concerned High Court or the President of the Tribunal etc., as the case may be. Then after compliance of legal procedure a larger bench is constituted and then hearing take place and ultimately a decision is passed either as per majority view or by a larger bench, etc. as the case may be.

Most popular view:

In this context the phrase ‘most popular view’ means   the view taken by largest number of judges or members (this need to be subject to some minimum numbers) in other decisions already rendered. For an illustration see the following table, in which a particular issue say hypothetical issue “A” has been considered by several benches of ITAT :

Bench of ITAT	Decided in favor of Assessee by	Decided in favour of revenue	Remarks
Various benches at Delhi	MR. A and Mr. B in a division bench. Mr. C in a “SMC” Bench. Mr. D and E in a division bench. Mr. F but Mr. G dissenting.	Mr.G but Mr. F Decided issue in favor of assessee and ther is difference of opinion.	MR. A,B,C,D, E and F (Six members) have already decided the issue or have taken decision or view in favour of assessee. In another bench Mr. G decided the issue in favor of revenue so there is difference of opinion between Mr. F and Mr. G. Suppose so far Mr. G alone has taken a view in favour of revenue. - see discussion below.

In the above case we find that there are two division benches and one SMC bench in favour of assessee on the same issue and such benches together had different five members of ITAT who have taken view in favour of assessee All these judgments are amenable to appeal before High Court.

Mr. F in another bench has also taken similar view but his companion member Mr. G has disagreed, hence reference to third member is to be made as per present law and practice. After this stage there can be different developments as discussed below:

Reference to a member who has already taken view in favor of assessee:

Now suppose the matter is referred to a member to act as third member, and such member is suppose one out of any of members who have already taken a view in favor of the assessee (that is Mr. A, Mr.B, Mr.C, Mr.D, Mr.E ) on the same issue in different benches while considering other cases.

Acting as the third member any one of these will obviously have to decide the issue in favor of assessee because he has already taken such a view and therefore, he will agree with Mr. F and disagree with Mr. G. And therefore, the issue will have to be decided in favor of assessee by majority view of Mr. F. and say Mr. A (acting as third member).

In such case instead of constituting the third member bench, it can be made Rule that the bench will consider views of other members, and decide the issue in light of view which is taken by largest number of members.

In this situation we find that issue remains decided in favour of assessee by all benches.

As shown above as per calculations, the most popular view so far taken is in favour of assessee, so the matter can be decided in that view, instead of constituting a third member bench. For this purpose amendment in law is required.

Reference to another member who has not yet considered similar issue:

Now suppose reference is made to Mr. H, who has not yet considered and decided similar issue. Mr. H agrees with Mr. G, that is he also decides the issue in favor of revenue and against the assessee.

Difference of opinion amongst benches:

After the matter was decided as per majority view of Mr. G and Mr. H in a third member bench we find that there are two division benches and one SMC bench consisting of five members who have taken view in favour of assessee. The sixth member Mr. F also took view in favour of assessee, however, his view or order could not become an order of bench because majority view of Mr. G and Mr. H became the final order, which is against assessee and in favour of revenue.

Now we find that there is difference of opinion – three benches in favour of assessee and one against the assessee. In such circumstances, as per present rules a special bench need to be constituted.

Special bench:

Suppose a special bench is constituted with three members. The constitution can be based on any of members of ITAT. They can be in different combination from members (a) who have already decided the matter in favor of assessee that is Mr. A, Mr. B, Mr. C, Mr.D and Mr. E or the member who took such view but his order could not gain finality that is Mr. F. or (b) members who have decided the matter against assessee ( Mr. G and Mr. H) or (c) members who have not yet considered such an issue. The three members bench as special bench will decide the issue, if there is unanimity, then the same view will be taken by all three members or it can be by majority 2:1. Whatever be the case the decision will be of a Special Bench , and then it will have to be followed by all benches.

Suppose Special bench consists of Mr. A., Mr. B and Mr. I (new member), Mr. A and Mr. B will normally take the same view which they took earlier that is in favour of assessee. Mr. I is newly considering such issue, he may take view in favor of assessee or revenue. Thus in this case mater is likely to be decided in favour of assessee.

Suppose Special bench consists of Mr. A, Mr. G and Mr. P, (president). In such situation Mr.A is likely to decide the issue in favor of assessee, as per his view which he has already taken earlier. Mr. G is likely to decide the issue in favour of revenue, as per view already taken by him. In this situation the view of Mr. P, will determine the final outcome of the case.

Majority view can be taken:

Instead of constituting ‘special Bench’, provisions can be amended to provide to ascertain majority views ( may be based on zonal basis or all India basis) and to follow the majority view as and when such situations arise.

Generally such matters go in further appeal:

When the matter is decided by Tribunals or High Courts, and there are differences of opinion, generally the matter is taken to higher forum till the Supreme Court. Therefore, in such cases it really make no difference to constitute Special or larger Bench because ultimately decision of the Supreme Court or High Court, as the case may be will prevail. This is because the matter is to be decided by higher court. Whether the order of Tribunal is of a single member or Special Bench, makes no difference so far further appeal is concerned. Therefore, in such cases instead of constituting third member bench, larger bench or special bench etc. the matter can be decided according to the most popular view taken so far by members or judges, as the case may be.

Supreme Court:

At stage of the Supreme Court also we find that many times larger bench is constituted. This is in several situations e.g. (a) when two judges have difference of opinion the matter goes to third judge (b) when a division bench has already decided the matter but subsequently other bench consider that the matter need reconsideration, then also a larger bench is constituted.  

At this stage also suppose if a matter was decided by a division bench and then followed by another four benches. And total number of judges of the Supreme Court who have taken similar view is say seven and then one judge or two judges acting in a new bench take a different view or express doubts about earlier judgment, author feels that better course can be to ascertain and to consider “most popular view”, instead of constituting larger bench.

Delivery of judgments is not fully scientific:

Delivery of judgments is not fully scientific or watertight situation. It is not like mathematics that 2+2 =4, 2-2=0 or and 2+3 = 5 or {H₂O = water}. Ground realities is that judgments also depend on several human factor like arguments placed by counsels of parties before judges, seniority of counsels or confidence which the counsels carry and trust they pose in judges, and the strength of counsels who appeared on behalf of opposite parties. The judges being human being their judgments are also affected by their attitude, personal thinking, personal views on the matter and many times personal bias of judges can make an altogether difference in judgment. It is very common when we find solicitors and counsels consider these human aspects also while preparing and arguing cases.

When the Supreme Court consider a matter it can also be worthwhile to ascertain the most popular view of judges of the Supreme Court and also the judges of various High Courts all over India on the issue. The most popular view can be applied to render finality to the dispute instead of unsettling ‘most popular view’ by rendering a view which is not most popular or which is an altogether a new view or is totally opposed to ‘most popular view’.

In practice we find that popular view gets weighted consideration:

We find that in normal course also most popular view find support. For example, when there is concurrently followed view of the CIT(A), ITAT and High Court, it is also a major factor to influence thinking of the judges of the Supreme Court. View taken by majority of High Courts can also influences the judges.

Amendment in law and procedures:

It is desirable that law can be amended to follow ‘most popular view’ of judges. For this purpose the following need to be provided:

Minimum number of members/ judges:

Minimum numbers of Tribunal members and judges of High Court and Supreme Court to be prescribed to be recognized in category of most popular. For example in case of ITAT minimum three members can be prescribed to be considered on all India basis. Until and unless three members have taken similar view, they need not be considered as ‘most popular view’.

For example, suppose a particular issue has been decided by only one division bench and two members, in such a situation two members views cannot be considered as ‘most popular view’. Therefore, if another bench consider similar issue and in that one member follow views of earlier bench and one member has a different view, then the matter can be decided in view of most popular view instead of sending the mater to third member or larger bench.

In case of High Courts also minimum three judges views (on all India basis) can made qualifying for consideration as ‘most popular view’, while the matter is before any high Court.

While the matter is considered by the Supreme Court, views of at least five different judges of various High Courts can be considered as qualifying for ‘most popular view’.

And while the matter is considered by the Supreme Court, views of at least three different judges of the Supreme Court can be considered as qualifying for ‘most popular view’.

Change in law to be made to follow the ‘most popular view’.

Procedure to be prescribed for collection and assimilation of information about orders and judgments.

Two views having almost equal popularity:

When in a situation it is found that judges are almost equally divided on the issue, then the matter will have to be considered in a fresh manner. For example suppose on all India basis eight members of ITAT has decided the issue in favor of assessee and seven members have decided against the assessee, then the matter will have to be considered afresh considering both views equally popular.

Conclusion:

The concept of adopting ‘most popular view of judges’ can be a good step to simplify and expedite administration of justice. This will also reduce risks of view of few judges rendering most popular view adopted by large number of judges as wrong.

Author feels that if a view is taken by say more than fifteen or twenty judges of high Courts, and there are only few judges say two or three who have taken different view, the Supreme Court can safely affirm the view taken by fifteen judges. However, where number of judges are almost equally divided, then the matter need a fresh look in totality. Suppose on a particular matter twenty five judges have decided issue in favor of assessee and twenty judges against the assessee, then a wholesome exercise need to be made and it may not be necessary for the Supreme Court to decide the issue as per most popular view at level of High courts.

However, when the counting is of judges of the Supreme court, the most popular view can preferably be adopted. However, in suitable cases at level of the Supreme Court when there are large number of judges of the Supreme court on both sides, most popular view may not be adopted and in that case matter can be considered by a larger bench of five or more judges of the Supreme Court.

Suitable exceptions of rule to follow most popular view of judges can be prescribed at level of high Courts and the Supreme Court.