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TMI Blog1985 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. The matter was taken up in appeal for both the years by the Department. The Tribunal set aside the order of the AAC because the assessee could not furnish the necessary particulars before the Tribunal and remanded the appeals to the AAC to enable the assessee to produce evidence in support of its claims. However, when the matter went back to the appellate authority, the appellate authority confirmed the addition on the ground that the assessee had not produced any evidence regarding the expenditure. The assessee took up the matter to the Tribunal. Before the Tribunal, the assessee had stated that no evidence of the actual expenditure incurred would be possible to be produced because eight years had already elapsed and the relevant papers necessary were not to be found. Relying on the decision of this court in CIT v. Karuppuswamy Nadar Sons [1979] 120 ITR 140, deduction of the entire amount was claimed. The Tribunal, having regard to the view which was originally taken by the appellate authority that the expenditure related to the provision of coffee and tea to the customers which was in the nature of customary hospitality, allowed only 50 per cent. of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in CIT v. Gheru Lal Bal Chand [1911] ITR 134, the decision of the Allahabad High Court in Brij Raman Dass and Sons v. CIT [1978] 104 ITR 541 and the decision of the Bombay High Court in ClT v. Shah Nanji Nagsi [1979] 116 ITR 292. In the last mentioned case, the Bombay High Court has taken the view that any expenditure incurred for providing messing to customers or constituents or offering of tea and pan to them is actually an essential part of business and does not partake the nature of hospitality or entertainment. Now, what is vehemently pressed before us by the learned counsel appearing on behalf of the Revenue is that the Revenue has gone up in appeal to the Supreme Court against another decision of the Bombay High Court in which the Bombay High Court has rejected a reference application on the question whether messing expenses relating to upcountry constituents incurred by the assessee was allowable as deduction and not hit by the provisions of s. 37(2B) of the I.T. Act. A short note with regard to the grant of leave by the Supreme Court is to be found in [1984] 147 ITR (Statutes Section), page 4, which shows that leave has been granted on March 23, 1984. The learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of merely recording an answer in terms of the decision in Karuppuswamy Nadar and Sons' case [1979] 120 ITR 140 (Mad). We need not point out that all this exercise is ultimately going to result in an answer to question No. against the Revenue in view of the very desirable practice of following earlier decisions of the same court, unless there is a decision of a higher court to the contrary which requires reconsideration of the earlier decision, judicial discipline will require that we follow the earlier precedents of this Court. The jurisdiction under s. 256(2) is not a mechanical jurisdiction which requires the High Court to direct the Tribunal to submit a statement of the case, the moment either the assessee or the Revenue is able to spell out a question of law arising from the order of the Tribunal. Under s. 256(2), there is a discretion in the High Court to require the Appellate Tribunal to state a case and refer it and where the High Court requires the Tribunal to state a case, there is an obligation on the Tribunal to state a case and refer the question as directed by the High Court. However, on a plain reading of sub-s. (2) of s. 256, it is clear that the discretion in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f-evident and contrary contention is patently inarguable and the High Court would automatically without any consideration whatsoever affirm the decision of the Tribunal, it will be a sheer waste of time for the Tribunal to refer case or for the High Court to direct the Tribunal to do so resulting in unnecessary expenses for the parties concerned. " With respect, we fully concur with these observations. The Division Bench in Venkatesa Mills Ltd.'s case [1965] 56 ITR 384 (Mad) was dealing with a matter arising out of the provisions of the W.T. Act. The Tribunal had declined to refer the question as to whether certain assets were exempt under s. 5(1)(xxi) of the W.T. Act. It was pointed out by the Division Bench that the Tribunal bad undoubtedly decided the appeal before it in accordance with the interpretation of s. 5(1)(xxi) made by this court in Ramaraju Surgical Cotton Mills Ltd. v. CWT [1962] 46 ITR 820. The Revenue had already obtained special leave to appeal in the Supreme Court against the said judgment. The contention of the Revenue before the High Court was that since the correctness of the decision which was followed by the Tribunal was being tested in the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. The proper interpretation of an important provision of a statute, section 5(1)(xxi) is beyond doubt a question of law and the point decided by the Tribunal is by no means inarguable or self-evident. On the other hand, it is quite a fairly arguable point. " With these observations, the Division Bench directed the Tribunal to state a case for reference as prayed for and as set out in the beginning of the judgment. The learned counsel for the Revenue wants us to read this judgment as laying down a proposition of law that whenever the correctness of the decision of this court is challenged in the Supreme Court and there is a decision of the Tribunal applying the said decision of this court and the Tribunal declined to make a reference, this court must of necessity direct the Tribunal to make a reference. With respect, it is not possible for us to read this decision as laying down any such proposition of law. The observations in the concluding part of the judgment of the Division Bench indicates that the Division Bench took the view that the learned judges who decided Ramaraju Surgical Cotton Mills' case [1962] 46 ITR 820 (Mad), themselves found some difficulty in deciding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Tribunal rejected the application for reference and when an application under s. 256(2) was filed by the Revenue, it was contended that since there was a conflict of opinion between the Punjab and Haryana High Court and the Allahabad High Court and, therefore, a question of law arises and that the Tribunal should be called upon to send statement of the case, the Division Bench took the view that it would be a futile exercise for the Tribunal to refer the matter to the High Court and if the Tribunal declined, then to issue a mandamus to the Tribunal to refer the matter, because in either eventuality, the answer would be a foregone conclusion. The Division Bench took the view that if a question of law has been settled by a High Court after dissenting from the view taken by another High Court and if thereafter similar cases come up before the Tribunal within the jurisdiction of that court or before that court, it could not be said that a question of law arises within the meaning of s. 256(1) or s. 256(2) of the I.T. Act, 1961. Now, undoubtedly in that case, the correctness of the view of the Punjab and Haryana High Court was not the subject of challenge in the Supreme Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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