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TMI Blog2023 (7) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the respondent only on the due date mentioned in the securities. Consequently, the interest accrued on the securities only on the due date and cannot be said to have accrued to assessee on any date other than the dates stipulated therein. The court also rejected the contention of revenue that interest accrues for broken period between two consecutive dates stipulated in the agreement/ instrument for payment of interest. The court went on to hold that if the assessee held the security upto 31st March and sold the same thereafter, but before the date on which interest was payable as stipulated in the security, interest cannot be said to have accrued to the assessee. The Commission has not articulated as to why it did not agree with the submissions made by the assessee s representative. The Hon ble Apex Court in Assistant Commissioner of Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd. [ 2008 (9) TMI 11 - SUPREME COURT] has held that a judicial decision acts retrospectively. The Judges do not make law, they only discover or find the correct law. The law has always been the same and if a subsequent decision alters the earlier one, the later decision does not make a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 1996-97 and was wrongly offered to tax in Assessment Year 1997-98. Accordingly 2nd Respondent brought to tax in Assessment Year 1997-98 a sum of Rs. 12,43,39,738/- (incorrectly mentioned as Rs. 12,46,39,738/-) being the difference between Rs. 25,17,79,849/- accruing in Assessment Year 1997-98 and Rs. 12,73,80,111/- offered by petitioner as income for Assessment Year 1997-98. 3. On 24th March 2000 petitioner filed an application under Section 245 C (Application for settlement of cases) of the Income Tax Act, 1961 (the Act) before the Settlement Commission in respect of Assessment Year 1997-98. The application was filed only for surrendering its claim for depreciation on certain leased assets. 4. Petitioner s application was admitted on 22nd November 2000 by 1st Respondent, viz., The Settlement Commission. The Commissioner of Income Tax, in reply to the Settlement Application, filed a report under Rule 9 of the Settlement Commission (Procedure) Rules, 1997, inter alia, praying for addition of Rs. 12,43,39,738/- being the net amount of interest accrued be brought to tax placing reliance on the findings of 2nd Respondent in the Assessment Order. The Settlement Commission after he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be concerned only with the legality of procedure followed and not with the validity of the order. But as held by the Hon ble Apex Court in Jyotendrasinhji vs. S.I. Tripathi and Orbs 1993 Supplementary (3) SCC 389 (SC), it is also well settled that the scope of an enquiry by the court should also consider whether the order of the Commission is in conformity with the provisions of law or contrary to the provisions and that such contravention has caused prejudice to petitioner. If the order of the Commission is contrary to the provisions of law certainly the court should interfere. (b) All the interest which the Assessing Officer (AO) wanted to add was on Government of India securities. The interest received was offered in the return of income as income, but the interest accrued was not offered as the same was neither due nor received. This was because the interest which had not become due was not income in the real sense. It became due on fixed dates and till that date, the right to income did not crystalize. (c) The Government of India securities provided for interest being paid on a particular date. When an agreement provides for payment of interest on a particular date the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the law is very clear that though the order of the Commission is in the nature of a package deal and it may not be possible always to dissect its order and the assessee should not be permitted to accept what is favourable to him and reject what is not, if the Court is satisfied that the order of the Commission is contrary to the provisions of the Act, the Court should interfere. 11. We are satisfied that the order of the Commission on this aspect, i.e., interest accrued but not due is contrary to the provisions of the law. The Settlement Commission in our view has not given any reasons also. It has simply stated that it agrees with the CIT (D/R) s view. The finding of the Commission reads as under : 4.3 Decision We would agree with the CIT (D/R) s view. Income having accrued and corresponding expenditure having been reckoned on mercantile lasts, the interest income shall be taxed on accrual basis for both the years under consideration. 12. In Director of Income Tax (International Taxation) vs. Credit Suisse First Boston (Cyprus) Ltd. (2013) 351 ITR 323 (Bom) the question of law that came up for consideration was whether interest can be said to have accrued to the assessee on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have accrued to assessee on any date other than the dates stipulated therein. Therefore, in our view the conclusion arrived at by the Settlement Commission under this head is not in conformity with the provisions of law and certainly such a contravention would prejudice petitioner. 14. Mr. Suresh Kumar had also submitted that the judgment of the Bombay High Court in Credit Suisse First Boston (Cyprus) Ltd. (supra) was a later judgment, delivered much after the Settlement Commission passed the impugned order. Mr. Suresh Kumar also stated that the judgment of the High Court relied upon by Mr. Thakkar as also the orders passed by ITAT for subsequent Assessment Years from 1998-99 onwards were passed after the order of the Settlement Commission. These submissions of Mr. Suresh Kumar are not acceptable. The Hon ble Apex Court in Assistant Commissioner of Income Tax, Rajkot vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC) has held that a judicial decision acts retrospectively. The Judges do not make law, they only discover or find the correct law. The law has always been the same and if a subsequent decision alters the earlier one, the later decision does not make a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is retrospective, except as regards matters that are res judicata or accounts that have been settled in the meantime . (emphasis supplied) 44. It is no doubt true that after a historic decision in Golak Nath v. State of Punjab AIR 1967 SC 1643 , this Court has accepted the doctrine of prospective overruling . It is based on the philosophy: The past cannot always be erased by a new judicial declaration . It may, however, be stated that this is an exception to the general rule of the doctrine of precedent. 15. Before we part, we should also note, in our view no reasons have been given by the Settlement Commission. In Jyotendrasinhji (supra) Revenue had argued that the Commission is not even required or obligated to pass a reasoned order. The Hon ble Apex Court held that the principle of natural justice (audi alteram partem) has been incorporated in Section 245 D itself which should mean, in our view, reasons have to be given. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. 16. The Hon ble Apex Court in Uttar Pradesh State Road Transport Corporation vs. Jagdish Prasad Gupta (2009) 12 Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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