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TMI Blog1996 (6) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy during the period you remained debtor in respect of plant and machinery. Entire outstanding liability was enhanced due to devaluation of Indian rupee which was not correct because the cost of asset is to be determined only on actual payment of foreign currency and not on fluctuations in exchange rate after the agreement is made. (2) It is also noticed that excess grant of refund under section 244A was allowed to you. As you had filed the return late on September 26, 1991, as against December 21, 1990, interest under section 244A amounting to Rs. 5,96,902 requires to be withdrawn. The petitioner has challenged the issuance of the said notice in this petition. It is contended by the learned advocate for the petitioner that the issuance of the notice under section 263 of the Act is bad, illegal and contrary to law. So far as depreciation is concerned, the Assessing Officer has passed an order of assessment in consonance with the law and the notice could not have been issued in view of the decision of the apex court in the case of CIT v. Arvind Mills Ltd. [1992] 193 ITR 255, the decision of this court in the case of New India Industries Ltd. v. CIT [1993] 203 ITR 933 (Guj) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Industries Ltd. v. CIT [1993] 203 ITR 933. One of the questions referred to this court was as under (at page 936) : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not holding that, on the basis of the mercantile system of accounting, the additional liability had arisen at the end of the accounting year and the same was of revenue nature and/or capital nature includible in the cost of the machinery ? " This court held that (at page 940) : "In view of this clear pronouncement of the Supreme Court, the only aspect which we are required to examine is as to whether the liability of the assessee can be said to have increased on account of devaluation of the rupee in the relevant previous year. In our opinion, when the assessee purchased assets at a price, its liability to pay the same arose simultaneously. Merely because the said liability was to be discharged in instalments, it cannot be said that the liability did not exist or accrue till the instalments become due and payable. It was that liability which had increased on account of fluctuation in the rate of exchange. In our opinion, therefore, the case of the assessee fell squar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that (at page 1905) : " We, therefore, hold that the law declared by the highest court in the State is binding on authorities or Tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. If that be so, the notice issued by the authority signifying the launching of proceedings contrary to the law laid down by the High Court would be invalid and the proceedings themselves would be without jurisdiction. " Mr. Shah submitted that in spite of a number of decisions to the effect that the income-tax authorities are bound to follow the decisions of the High Court and the Supreme Court, they are not following them, He further submitted that in certain cases, even after drawing their attention to the law laid down by the courts, they are not dropping the proceedings. If there are contrary decisions of this court or there is no decision on a particular point, Mr. Shah submitted that the Commissioner may issue a notice, but in the instant case, the law is laid down by the apex court and there is no alternative but to follow the decision. Mr. Shah submitted that for the previous as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a number of years may elapse by which time the exercise of the power under section 263 may become barred. When an Assessing Officer has passed an order on the basis of the law laid down by the court, can it be said that the Assessing Officer's order is erroneous ? We are of the view that exercising of the power to review in such a situation is not in accordance with law for the simple reason that the order of the assessing authority cannot be said to be erroneous as he has rendered the decision following the decision of a higher authority or a court on the same point. It is required to be noted that the decisions reached by the Tribunal or the High Court are binding upon the Assessing Officer and discipline demands that he should follow the decision of the Tribunal or the High Court, as the case may be. It is not open for him to ignore the same on the ground that the Tribunal's or the High Court's ruling on the question is the subject-matter of revision or appeal before the higher forum. If he is permitted to take such a view, it would introduce nothing but judicial indiscipline, which is not called for. It would lead to a chaotic situation. The grievance of the Revenue may be rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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