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TMI Blog1994 (10) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... n such borrowings. Assessee had claimed deduction on account of interest paid to the Directors in respect of money utilised for the purchase of the building. Deduction up to the assessment year 1984-85 was allowed to the assessee. The interest received from the assessee-company has been disclosed by the Directors in their individual returns and has been assessed as such. For assessment years 1985-86 and 1986-87 Assessing Officer has held that the assessee has not purchased the building for the purpose of business and that the same has been purchased in order to circumvent the provisions of the tax laws. The deduction has thus been denied to the assessee. CIT (Appeals) has confirmed the view of the Assessing Officer. It has been pointed out by the learned CIT (Appeals) that the assessee-company is run by Shri Ashok Kumar and his wife, Mrs. Shobha Kumar. Shri Sachhin Kumar, minor son of Shri Ashok Kumar, is also the shareholder. The CIT (Appeals) has held that Shri Ashok Kumar was carrying on business in the status of a firm, where the wife Smt. Sobha Kumar was the partner. The share income earned by the wife in that firm was clubbed in the hands of Shri Ashok Kumar under section 64 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to allow the deduction as the Assessing Officer had included the income from the said property as the income of the company. Shri Aggarwal further contended that the Assessing Officer has not disputed the incorporation of the company. He has further contended that Assessing Officer has not established that assessee has adopted a colourable device. It was accordingly contended that the deduction may be allowed to the assessee on account of interest paid to the Directors. 6. Learned Departmental Representative, on the other hand, contended that principles of res judicata are not applicable to the income-tax proceedings. Each year of assessment is independent and the Assessing Officer is not bound to follow the decision of his predecessor in the earlier assessment years. According to learned Departmental Representative, the fact that assessee was utilising the said property for the residence of its only Directors and that there was no business necessity to purchase the property had not been disclosed by the assessee in earlier years. Assessing Officer having made inquiries during the year under appeal and discovered new facts which justify a different conclusion than arrived at by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. What is important for consideration of the issue in hand is as to whether the expenditure incurred by the assessee in the purchase of a property is an expenditure laid out for the purposes of the business and whether the Assessing Officer is bound by the decision of his predecessor in having allowed a deduction on account of interest. Let us consider the background of the facts indicated by the CIT (Appeals) as also by the Assessing Officer as to whether the property has been purchased by the assessee-company for the purposes of business. The findings of fact recorded by the CIT (Appeals) are contained in para 2.1 of her order, the relevant portion of which is reproduced below : " 2.1 I have carefully considered the submissions made. At the outset it may be mentioned that there are 3 directors in the appellant-company who are members of the same family. Shri Ashok Kumar is husband of Mrs. Shobha Kumar and father of Shri Sachin Kumar. As apprised by the counsel during the course of the appellate proceedings prior to the incorporation of the company Shri Ashok Kumar was carrying on business in the status of a firm where the other partner was his wife Smt. Shobha Kumar. The share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has pointed out in the assessment order that up to 1987 the registered office of the company has not been shifted in the building which is purchased by the assessee-company. It has also been pointed out by the Assessing Officer that buying and selling of property or letting out of the house property is not one of the objects of the company for which it has been incorporated nor is it the business of the company. Neither before us nor before the Revenue authorities the purpose for which the property has been purchased by the assessee-company has been indicated. Whatever might have been the purpose for the purchase of the property it has not been established before us or before the Revenue authorities that the property had been acquired in furtherance of business interests. The rental income of the property as disclosed is Rs. 18,000. Interest paid to the partners is Rs. 1,76,692. Thus, it is clear that the property had not been acquired for purposes of making money by letting out. As has been highlighted by the CIT (Appeals), assessee was not in need of having its own business premises for furtherance of business interests as the only source of income of the assessee-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not ordinarily operate as res judicata in respect of the matter decided in any subsequent year, for the Assessing Officer is not a court and he is not precluded from arriving at a conclusion inconsistent with his conclusion in another year. It is open to the Income-tax Officer, therefore, to depart from his decision in subsequent year, since the assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. A decision reached in one year would be a cogent factor in the determination of a similar question in a following year, but ordinarily there is no bar against the investigation by the Income-tax Officer of the same facts on which a decision in respect of an earlier year was arrived at ". As already stated, if a wrong has been committed in the past, the same could not be allowed to be perpetuated irrespective of the fact whether the decision goes in favour or against the assessee. We, accordingly, dismiss the claim made by the assessee in this regard. 11. The disallowance made by the Assessing Officer on account of interest is accordingly confirmed. I.T.A. Nos. 5658 and 5659 (Delhi) of 1992 : 12. ..... 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