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TMI Blog2000 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... alt with by the Settlement Commission, the transaction relating to Rasoolpura property is one. The owners of the plot entered into an agreement with the petitioners, according to which the petitioners were allowed to develop the plot and to construct the buildings and the petitioners were authorised to let out the buildings during the period of agreement which is stipulated to be eleven years from January 1, 1984. The terms and conditions of the agreement have been adverted to by the Settlement Commission. According to the said terms, the cost of construction shall be borne by the petitioners ; however, such construction shall be deemed to have been carried out on behalf of the owners and the construction as and when made shall become the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Commission was, therefore, of the view that the cost of construction incurred by the petitioners was in the nature of capital expenditure. The Commission referred to various decisions on the subject before reaching the impugned conclusion. Learned standing counsel for the Income-tax Department has contended that the view taken by the Commission in regard to the admissibility of development expenditure cannot be the subject-matter of challenge under article 226 of the Constitution and is not amenable to judicial review under article 226. In our view, the said contention is well founded and ought to be accepted. It is not open to us, in exercise of the jurisdiction tinder article 226, to decide whether the conclusion recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which makes the decision of the Settlement Commission final and conclusive both on questions of law and fact. The power conferred on the Settlement Commission is so wide that it can take any view on any question of law. which it considers appropriate, having regard to the facts and circumstances of a case, which would be applicable only to that case and it has also the power to give immunity against prosecution or imposition of penalty. It is in this background that we should find out an answer to the second question, namely, the scope for interference against a decision of the Settlement Commission in a petition under article 226 of the Constitution of India. The provision for settlement would show that it is in the nature of statutory arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f counsel for the Revenue and observed as follows: "May be, there is also some force in what Dr. Gauri Shankar says, viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not." Then follows the crucial dicta, which we quote : "Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following observations : "The Commission has interpreted the trust deeds in a particular manner. Even if the interpretation placed by the Commission on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be said to be a violation of the provisions of the Income-tax Act. It is equally clear that the interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years." Thus, even the interpretation of a deed of trust which is often considered to be a legal question was held to be within the exclusive domain of the Commission and is not amenable to judicial r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of law ; more so when such error can be established by a long drawn process of reasoning and debate. It is not as if the conclusion reached by the Settlement Commission on the issue which is in the nature of a mixed question of law and fact, can be said to be ex facie and patently untenable. It is neither a decision reached de hors the provisions of the Act, nor does it transgress any provision of law. The error, if any, is only in the course of applying the law to the facts of the particular case and/or interpreting the terms of the agreement---which is very much akin to the case of Jyotendrasinhji's [1993] 201 ITR 611 (SC). Viewed from another angle, the legal error, if any, committed by the Commission is not one which can be co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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