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TMI Blog1987 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... also the High Court ruling, and without feeling bound by the Special Bench ruling on questions covered by the High Court ruling. Indeed, on such latter questions, the High Court ruling would continue to bind all tax authorities in the State of Maharashtra." The facts giving rise to the giving of these directions in exercise of writ jurisdiction under article 226 of the Constitution of India arise in the following circumstances. Universal Ferro Allied Chemicals Ltd. is a public limited company registered under the Companies Act, 1956, and carries on the business of manufacturing ferro manganese in the State of Maharashtra. The company exports ferro manganese in large quantities to various countries and this export is being carried on for the last ten years. The average export turnover is about rupees two crores per annum. The company, for the purpose of export, incurs various expenses such as that of cartage and coolie charges, transportation, insurance, printing and stationery, postage, etc. Section 35B of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), inter alia, provides that where an assessee has incurred after February 29, 1968, any expenditure (not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was entitled to claim weighted deduction of Rs. 43,853 under section 35B of the Act. The application for reference, which was numbered is Income-tax Application No. 258 of 1976, was heard on October 31, 1977, and rule was discharged. The Division Bench felt that deduction under sub-clause (iii) was permissible where the expenditure was incurred by the assessee either outside India or in India, but it must pertain to the purposes mentioned in the various sub-sections of section 35B of the Act. After making this observation, the Division Bench declined to grant the reference, because the amount involved was negligible, Several Benches of the Income-tax Appellate Tribunal, Bombay, had taken conflicting views in respect of the interpretation of section 35B of the Act and to resolve this difference and uncertainty, a Special Bench was constituted to determine the scope and applicability of section 35B of the Act. The Special Bench heard several appeals and the petitioners intervened at the hearing. It was claimed before the Special Bench that the decision recorded by the High Court in the case of Eldee Wire Ropes P. Ltd. [1978] 114 ITR 485 as regards the ambit of sub-cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir destination outside India or on the insurance of goods while in transit and (c) issuing of writ of mandamus directing the respondents to follow the judgment of the High Court in the case of Eldee Wire Ropes Ltd. [1918] 114 ITR 485 (Bom) and not to follow the judgment of the Special Bench to the extent mentioned in prayer (a) and to allow weighted deduction expenditure as claimed under section 35B(1)(b)(iii) of the Income-tax Act, 1961." The relief sought in the petition was resisted by the Department by filing a return sworn by Miss P. D. Advani, Income-tax Officer, Companies Circle-VI (12). The Department pointed out that several matters of the petitioner-company were pending before the various authorities and where the issue in respect of weighted deduction was involved. The Department claimed that it was open to the petitioner-company to challenge the assessment order passed by the authorities by adopting proper remedies and that it was not necessary or desirable for the High Court to exercise jurisdiction under article 226 of the Constitution of India. Learned single judge by the impugned order dated June 16, 1982, referred to the decision of the High Court in Eldee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored so far as it is in conflict with the High Court ruling. It was urged that such a direction would cause absolute chaos in the working of the Income-tax Department. We find considerable merit in the submission of learned counsel. The petitioner-company had approached this court under article 226 of the Constitution of India and the relief sought for was the setting aside of the judgment of the Special Bench in so far as it deals with the interpretation of the provisions of section 35B(1)(b)(iii) of the Act. The learned single judge did not choose to examine that aspect of the matter, but merely sounded a feeling that there was a conflict between the judgment of the High Court and the decision given by the Special Bench. The judgment under challenge does not examine whether the view taken by the Special Bench of the Tribunal is correct or otherwise. We have examined the decision given by the Special Bench and we find that the Special Bench has given various reasons as to why the observations made by the High Court do not conclude the issue. It is not possible to hold that the decision recorded by the Special Bench is, on the face of it, erroneous and was recorded by ignoring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to examine whether the view taken by the Special Bench is correct or otherwise or whether that view is in conflict with the view taken by the High Court. The mere observation that, " It does appear, at least as regards section 35B(1)(b)(iii) of the Act, that the Special Bench ruling is not consistent with the High Court ruling, and, indeed, the conflict is obvious " is not enough to hold that the learned judge felt that the decision of the Special Bench was erroneous. Mr. Dastur then submitted that the learned judge granted prayer (c) in the petition where the company sought a direction that the Department should follow the judgment of the High Court and ignore the judgment of the Special Bench to the extent mentioned in prayer (a) of the petition. Surely, a writ of mandamus is not issued for grant of such prayers. As rightly pointed out by the learned judge, the decision of the High Court is binding on every authority within the State of Maharashtra and that being the constitutional provision, a writ of mandamus is not required to be issued for directing the subordinate authorities to obey the orders of the High Court. It cannot be overlooked that the Special Bench was not on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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