9911796707
TMI Blog1975 (2) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1971-72, the company had claimed and was granted deduction in respect of its liability for gratuity to its employees on the basis of actual payments made during each relevant accounting year. For the next assessment year, however, the company claimed a deduction of a sum of Rs. 1,28,09,135 on the footing that the said amount represented its gratuity liability on an actuarial valuation, and the contention of the company was accepted by the Income-tax Officer. It may be mentioned that this allowance was in accordance with a circular dated 21st September, 1970, issued by the Central Board of Direct Taxes, Government of India, New Delhi ; this circular will hereinafter be referred to as the " first circular ". We shall refer in detail to this first circular subsequently. We are concerned with the assessment year 1973-74. The company obtained an actuarial valuation of its gratuity liability for the accounting year ending 31st March 1973. According to the company, an amount of Rs. 2,77,52,991 was the amount ascertained as a result of the said actuarial valuation. We are really not concerned with the reason why the provision of the actuarial calculation increased from sl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be considered as a contingent liability. Such provision of gratuity may be treated as an admissible deduction under section 37(1) of the Income-tax Act, 1961." " Second Circular No. 146 (F. No. 228/2-73-IT(A-II)), dated 26th September, 1974. Attention is invited to Board's Circular No. 47 (F. No. 9/100/69-IT(A-II)), dated 21st September, 1970, on the above subject. In this circular the Board has considered the question as to whether provision made by an assessee in its accounts for estimated service gratuity payable to its employees could be allowed as a deduction even though no approved gratuity fund under the provisions of the Income-tax Act had been set up. At the relevant time when this circular was issued, the Supreme Court's decision in the case of Metal Box Company of India Ltd. v. Their Workmen was available and taking note of certain observations in this particular decision of the Supreme Court, it was felt that provision of gratuity on a scientific basis (in the form of actuarial valuation carried out every year) could be considered to represent a real liability of the employer to the employees. Accordingly, the Board decided that such provision would not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is submitted that in view of the directions given in the second circular, which directions would be binding on or likely to be followed by the Income-tax Officers dealing with several assessees, the companies concerned would be required to prefer separate appeals in several separate assessments which will ultimately result in further second appeals to the Income-tax Appellate Tribunal and thereafter in references to the High Court. The company has also annexed to the petition a resolution passed by the Bombay Chamber of Commerce and Industry, which would seem to suggest that the question of law raised and agitated in the petition is not one concerning the individual case of the company only but is raised in a sort of representative action for and on behalf of all companies similarly situated all over India. Accordingly, the company has sought a writ or order in the nature of mandamus or other appropriate writ, direction or order under article 226 of the Constitution of India, directing the Income-tax Officer to allow the aforesaid gratuity liability as a deduction in computing the assessable income of the company. A return has been filed by the Income-tax Officer in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of mandamus in the form sought for by the company but merely quash the direction contained in the second circular to complete the pending assessments in the light of instructions given by the Central Board of Direct Taxes in that circular and leave it to the Income-tax Officer to finalise the assessments according to the provisions of the Income-tax Act and uninfluenced by any instructions or directions given by the Central Board of Direct Taxes. Mr. Joshi referred us in this connection to Sirpur Paper Mills Ltd. v. Commissioner of Wealth-tax . That was a case under the Wealth-tax Act. He also referred us to Orient Paper Mills Ltd. v. Union of India, which was a case under the Central Excises and Salt Act, 1944. As indicated earlier, it is our view that it would be appropriate to consider this question after discussing the various decisions which were discussed at the Bar and the respective contentions based on such decisions. As stated earlier, it is the admitted position that the accounts of the company are kept on the mercantile system of accounting. The nature of this system has been adverted to in several judgments including those of the Supreme Court. Briefly stated, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phraseology employed in that provision and that of section 28(1) of the Income-tax Act, 1961. The deductions and the allowances which are now contained in sections 30 to 37 of the Act of 1961, were, it may be stated, to be found in section 10(2) of the Act of 1922. With this background the observations in Badridas Daga's case may now be noted. According to Venkatarama Aiyar J., who spoke for the Supreme Court, it was well-settled that : " Profits and gains which are liable to be taxed under section 10(1) are what are understood to be such according to ordinary commercial principles. ' The word " Profits...........is to be understood, observed Lord Halsbury in Gresham Life Assurance Society v. Styles, in its natural and proper sense--in a sense which no commercial man would misunderstand '." It was further observed : " The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it. If that is established, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging to the employer, the gratuity can be forfeited to the extent of the damage or loss so caused. Similarly, gratuity payable to an employee shall be wholly forfeited if the services of the employee have been terminated for riotous or disorderly conduct or any other act of violence on his part. Similarly, the gratuity amount payable to the employee may be totally forfeited if the employee's services have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by the employee in the course of his employment. Thus, it is to be seen that although under sub-section (1) gratuity is payable to all employees after they have rendered continuous service for not less than five years in the sense that death, retirement, resignation or superannuation constitute what may be called cumulatively a certainty in the sense that one of these has to happen, sub-section (6) provides for two or three contingencies in which such payment is liable to be wholly or partially forfeited. It is in the light of these provisions that the judgments pertaining to gratuity may now be considered and understood. The first of the cases which deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt for that year and thus promotes the ascertainment of the 'annual profits or gains arising or accruing from' the trade." The learned Law Lord went on to observe : " The position, therefore, was that the appellant's liability to pay a lump sum could only be avoided by some breach of contract or grave misconduct on the part of the employee concernd. It may be correct to call such a liability contingent, but I must say the contingency seems to me too remote to justify a prudent trader or, for that matter, a competent accountant, in ignoring the liability until the day for payment has arrived. Whether, if this appeal related to but one employee and one lump sum, the degree of the contingency would, nevertheless, be such as to preclude a present allowance in respect of the future liability is a question which, in my opinion, does not call for decision on the facts of this case." Before the House of Lords it had been contended on behalf of the Crown, which contention appears to have found favour with the Court of Appeal, that this was a contingent liability and, therefore, the claim of the assessee was liable to be rejected. It was observed that the Court of Appeal had looked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the obligations that matters to the trader, and experience may show that, while each remains uncertain, the aggregate can be fixed with some precision.". Lord Radcliffe then went on to observe : " But, whatever the legal analysis, I think that for liabilities as for debts their proper treatment in annual statements of profit depends not upon the legal form but upon the trader's answers to two separate questions. The first is : Have I adequately stated my profits for the year if I do not include some figure in respect of these obligations ? The second is : Do the circumstances of the case, which include the techniques of established accounting practice make it possible to supply a figure reliable enough for the purpose ? ". These observations have been set out in in extenso because it is this case which has been subsequently referred to in Indian decisions and we were assured by the learned counsel for the company that the case still remains a leading case on the law in England. The decision in Southern Railway of Peru Ltd. came to be referred to by the Supreme Court in Indian Molasses Co. (Private) Ltd. v. Commissioner of Income-tax. In that case the assessee-company h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us for our acceptance and that these observations are fully consistent with the later decisions of the Supreme Court, particularly in the case of Metal Box Company of India Ltd. v. Their Workmen, to which reference will be made later on. In Indian Molasses Company's case, Hidayatullah J. (as he then was), speaking for the Supreme Court, observed as folllows : " Side by side with these principles, there are others which are also fundamental. The income-tax law does not allow as expenses all the deductions a prudent trader would make in computing his profits. The money may be expended on grounds of commercial expediency but not of necessity. The test of necessity is whether the intention was to earn trading receipts or to avoid future recurring payments of a revenue character. Expenditure in this sense is equal to disbursement which, to use a homely phrase, means something which comes out of the trader's pocket. Thus, in finding out what profits there be, the normal accountancy practice may be to allow as expense any sum in respect of liabilities which have accrued over the accounting period and to deduct such sums from profits. But the income-tax laws do not take every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact it had been decided seven days after the Indian Molasses Company's case and Hidayatullah J. (as he then was), who delivered the judgment in the latter case, was a party to the judgment in the Calcutta Company's case, although the actual judgment was delivered by Bhagwati J., speaking for the Supreme Court. Now, in Calcutta Company's case I the assessee-company bought lands and sold them in plots for building purposes undertaking to develop the plots by laying out roads, providing a drainage system and installing lights, etc. When the plots were sold the purchaser paid only a portion of the purchase price and undertook to pay the balance in instalments. The assessee company in its turn undertook to carry out the developments within six months ; but, according to the Supreme Court, the period was not of the essence of the contract. In the relevant accounting year the assessee-company actually received in cash only a sum of Rs. 29,392 towards the sale price of the lands, but in accordance with the mercantile system of accounting adopted by it, it credited in its accounts a total sum of Rs. 43,692 representing the full sale price of the lands. At the same time it debited an est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation date. It was observed by the court that if there is no debt owed on the valuation date, it could obviously not be deducted in determining the net wealth which is liable to tax under the Wealth-tax Act. The Supreme Court observed that the right to obtain gratuity under the awards arises only when there is determination of employment and not before and that the liability did not exist in Praesenti but was contingent upon the determination of the employment. The case of Southern Railway of Peru and the observations therefrom were brought to the attention of the court. But, according to the Supreme Court, the House of Lords in that case was concerned with determining the deductibility of the present value of a liability which may arise in future in the computation of taxable profits for the relevant year under the Income-tax Act, and that the same considerations could not apply to a case under the Wealth-tax Act where the liability to pay wealth-tax is charged upon the net wealth of an assessee. It is pertinent to note that no fault was found with the reasoning of the House of Lords or with the view that before profits of a business could be fairly assessed (in the sense of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case is not about the admissibility of a provision made by a trader by the adoption of a reasonably satisfactory method estimating the present value of an obligation which may arise in future to pay a sum of money to his employees. The question that falls to be determined is whether the liability which arises on transfer of the business is to be regarded as a permissible outgoing in the account of the business which is transferred. Broadly stated, the present value on commercial valuation of money to become due in future, under a definite obligation, will be a permissible outgoing or deduction in computing the taxable profits of a trader, even if in certain conditions the obligation may cease to exist because of forfeiture of the right. Where, however, the obligation of the trader is purely contingent, no question of estimating its present value may arise, for to be a permissible outgoing or allowance, there must in the year of account be a present obligation capable of commercial valuation.". It is clear, therefore, that even in this case the Supreme Court appears to have confirmed the principle enunicated by the House of Lords. We now turn to Metal Box Company of India L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers who retired was Rs. 1,31,585 and Rs. 87,295, respectively. The Union contended that the company could deduct from the gross receipts only the sums actually paid during the year. The company on the other hand, maintained that what it had done was legitimate and was warranted by the principles of accountancy and, therefore, the whole amount of Rs. 18.38 lakhs was deductible in arriving at its net profits. Tile question which the Supreme Court was called upon to consider was whether it was legitimate in such a scheme of gratuity to estimate the liability on an actuarial valuation and deduct such estimated liability in the profit and loss account while working out the net profits of the company. It was observed by Shelat J., speaking for the Supreme Court, as under : " In the case of an assessee maintaining his accounts on the mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only in case of amounts actually expended or pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company had the benefit of the employee's service during that year, provided the present value of the future payments could be fairly estimated. It may be mentioned that the passage from Southern Railway of Peru's case, which we have quoted earlier, has been quoted in extenso in the judgment of Metal Box Company' case, repelling the contention that such a provision was merely for a contingent liability which may or may not come about ; and this argument advanced on behalf of the workmen appears to be repelled as was the argument of the Crown by the House of Lords. It appears thereafter from the report that it was contended before the Supreme Court that such a claim on behalf of the Metal Box Company ought not to be countenanced inasmuch as it was not in accordance with the Companies Act, and further that such a provision was not permissible under the Income-tax Act, 1961. Both these aspects were considered by the Supreme Court and the contentions based on the provisions of the two enactments negatived. As far as the Income-tax Act, 1961, is concerned, it was observed : " But the contention was that though Schedule VI to the Companies Act may permit a provision for contingent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta but part of the ratio of the case, fully consistent with the previous decisions of the court, and, accordingly, the law of the land, binding upon the courts and all officers including Income-tax Officers. Alternatively, it was submitted by Mr. Joshi on behalf of the revenue that in his view the observations of the Supreme Court were per incuriam and, therefore, ought not to be followed by the High Courts and that, in any event, no writ of mandamus should issue on the basis of these observations if the court was satisfied that the same were per incuriam. In connection with these two heads of argument it would become necessary to refer briefly to some authorities of our High Court and the other High Courts cited at the Bar. But before doing so, we think it would be proper to complete the recital of the Supreme Court cases by referring to Bombay Dyeing and Manufacturing Co. Ltd. v. Commissioner of Wealth-tax, which has been mentioned in the forefront in the second circular of the Central Board of Direct Taxes, which circular has been impugned in this petition. In the above-cited case the Supreme Court was concerned with computing the net wealth of the assessee-company which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a point which is not necessary for the decision of a case. This definition draws a clear distinction between a point which is necessary for the determination of a case and a point which is not necessary for the determination of a case. It was, however, observed that in both cases the point must arise for the determination of the Tribunal. The question which was necessary for the determination of the case would be the ratio decidendi. The opinion of the Tribunal on the question which was not necessary to decide the case would be only an obiter dictum. However, according to the Division Bench, it would be incorrect to say that every opinion of the Supreme Court would be binding upon the High Courts in India ; the only opinion which would be binding would be an opinion expressed on a question that arose for the determination of the Supreme Court and even though ultimately it might be found that the particular question was not necessary for the decision of the case, even so if an opinion was expressed by the Supreme Court on that question the opinion must be regarded as binding upon the High Courts. The relevant observations from the judgment of Chagla C.J. are to be found at pages 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncept of commercial profits and the proper approach to the claim of the company to make the deduction for the provision under contemplation. Again, according to the contention of the learned counsel for the company, it was open to the learned judges of the Supreme Court to decide this question on first principles, being guided by the express statutory provisions under the Payment of Bonus Act, or it was open to them to decide this question with the help of analogous provisions and principles underlying the decisions in what they regarded as comparable enactment, viz., the Income-tax Act. It was submitted that in case the second approach was resorted to by the Supreme Court, it would not be proper for the High Court to hold that the observations made concerning the provisions in the Income-tax Act and the judicial decisions under that Act are casual observations or obiter. As far as this contention is concerned, it was submitted that where the Supreme Court has adopted an approach and after adopting that approach had indicated its views on an enactment which it expressly or by implication regards as comparable to the enactment under consideration, the views expressed by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivala whilst dealing with this aspect of the matter that one of the sums deductible from the gross profits of the employer under the provisions to be found in section 6 of the Payment of Bonus Act would be direct taxes which the employer is liable to pay for the accounting year in respect of his income, profits and gains during that year, and that it would be open to a court having regard to the statutory provisions to seek to reconcile its decision under the Payment of Bonus Act with the position as, according to it, would exist under the Income-tax Act so that the estimation or computation of gross profits would be the same for both purposes and would not be lower for the Payment of Bonus Act and higher for the Income-tax Act, inasmuch as this might result in hardship to the workmen concerned. The question before us is not what we would have done had we been faced with the task of deciding the question which came up for decision before the Supreme Court in Metal Box Company's case. We might have decided the case on first principles, restricting our decision to the provisions of the Payment of Bonus Act, 1965. That, however, the Supreme Court does not seem to have done. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted value of the assessee-company's liability to pay gratuity based on an actuarial valuation was determined at the instance of the High Court at Rs. 1,05,200. Before the High Court the Calcutta Company's case, Indian Molasses Company's case, Standard Mills' case, were referred to, and finally the Metal Box Company's case , which, according to Mr. Joshi, makes only casual observations regarding the position under the Income-tax Act, was considered and applied. It was held that the Government order provided that the gratuity would be payable to an employee not only in respect of his future services but also for his past services. Thus, in order to ascertain the quantum of liability as on the date the order came into effect, the past services of the employees had also to be taken into account. In the circumstances every businessman would make provision every year for his liability under the notification. According to the Allahabad High Court, the liability for payment of gratuity ascertained on actuarial calculations, in which all contingencies are taken into consideration, is a liability On praesenti and is capable of ascertainment, and, therefore, the sum of Rs. 1,05,200 was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 55,712 and Rs. 12,001 to the Employees' Gratuity Fund for the accounting periods ending on 31st October, 1956, and 31st October, 1957, and in its balance-sheets the assessee-company showed these amounts under the head " Current Liabilities and Provisions ". The assessee-company also gave credit of the amount of gratuity payable under the agreement to the employees in the account of each of the employees. The Income-tax Officer had allowed deduction only of the actual amounts disbursed during those years and disallowed the balance. According to the Delhi High Court, the provision made by the assessee-company for payment of gratuity under its agreement with the employees dated 14th February, 1956, was in the nature of revenue expenditure and the amounts were allowable as business expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922, for the two assessment years respectively. The gratuity payable to an employee represented a part of the emoluments payable to him for rendering service during each year. The right to receive gratuity accrued to the employee as soon as he completed a year of service, and, as a corollary, the liability to pay the gratuity to the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been observed in a number of decisions of this court, the latest of which is Commissioner of Income-tax v. Tata Sons Private Ltd. the established practice and policy, is that one High Court must accept the view taken by another High Coutt in the interpretation of the section of a statute which is an all-India statute. It is, however, unnecessary to base our view of the position under the Indian Income-tax Act, 1922, merely on the view taken by the Allahabad and Delhi High Courts inasmuch as in India United Mills Ltd. v. Commissioner of Income-tax, a similar view appears to have been taken by a Division Bench of this court also. In that case the facts were as follows : By an award given under the Bombay Industrial Relations Act, 1946, the Industrial Court had directed payment of gratuity to workmen of the assessee-company in accordance with the scale provided therein, the amount of gratuity being dependent on the wages at that time and the number of years of service put in by the workmen. In order to implement this award the assessee-company provided or set apart during the year 1951, an amount of Rs. 21,77,359 for a gratuity fund made up of Rs. 19,11,658 on account of initial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have to be allowed as business expenditure provided it could be said that the amount claimed as a deduction had been arrived at by adopting a scientific method of determining the present value of the said liability. It had been contended by the revenue before the High Court in India United Mill's case , that in the case which was before the High Court for consideration the estimate of the liability had not been properly arrived at. According to the High Court, it was unnecessary to decide this particular issue in view of the creation of the trust inasmuch as the amount had been actually paid over by the assessee-company to the trustees and, therefore, this was a case of actual expenditure and not merely a provision on account of the liability. Mr. Joshi had urged before us that in India United Mills' case, the facts disclosed an actual irretrievable parting of the amounts by the assessee-company, and he submitted that this was the basis why the questions were answered in favour of the assessee-company. With respect to his submission, it proceeds upon an erroneous appreciation of what that judgment discloses. This aspect of the matter assumed importance before the High Court only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... framed under the Income-tax Act provide a complete code for such allowance and provision made for gratuity liability. He conceded that there was no express bar to such provision as was intended to be made by the company before us. But, according to his submission, there was an implied bar by reason of these provisions read together with the Rules, which bar had not been properly considered by the Supreme Court in Metal Box Company's case, and that to that extent the decision was per incuriam and not binding on the High Courts. The provisions of section 36(1)(v) and section 40(a)(iv), on which reliance was placed, may be set out : " 36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28--... (v) any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust." " 40. Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head ' Profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt that there is a manifest slip or an erroneous observation which is inconsistent with a specific statutory provision or a binding authority. In connection with this aspect of the matter we were referred to a discussion in Morelle Ltd. v. Wakeling . The Court of Appeal was called upon to hold that its earlier decision in Morelle Ltd. v. Waterworth was per incuriam. This submission was not acceptable and it was observed that a decision should be held to have been given per incuriam only where it was given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court, so that in such cases some part of the decision or some step in the reasoning on which it was based was on that account demonstrably wrong. The Court of Appeal went on to observe that a decision was not to be treated as having been given per incuriam simply because of a deficiency of parties, or because it might be made to appear that on an earlier occasion the court had not had the benefit of the best argument. It was finally urged that the decision of the Supreme Court could not be said to be per incuriam inasmuch as the provisions contained in section 36(1)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business or profession. Apart from such insurance, insurance against loss of profit and standing charges is a common type of insurance taken by various assessees. Can it possibly be contended that the only deduction permissible in respect of insurance premia is that contemplated by section 36(1)(i). and no other insurance premium is allowable as a deduction although it might be properly regarded as pertaining to the business activity of the assessee ? It is important in this connection to appreciate that under sections 40 and 40A of the Income-tax Act, 1961, are to be found specific express prohibitions against allowing certain types of deductions. Bearing in mind that where the legislature wanted to prohibit certain claims it did so expressly under these sections, it appears to us that the contention that such bar should be necessarily implied is not one that deserves to be easily accepted. Bearing all these considerations in mind the contention of Mr. Joshi that there is a bar by necessary implication by the provisions of section 36 is one which does not deserve to be accepted. As the Supreme Court has observed in Metal Box Company's case, there appear to be two steps in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board as to what the Supreme Court had observed in the Bombay Dyeing's case is not borne out by a careful perusal of the observations made by that court in its judgment. These observations did not warrant the conclusion that the Supreme Court had in any way doubted or limited or restricted its observations in Metal Box Company's case. Bearing in mind the discussion which is to be found in the earlier part of this judgment, dealing with the somewhat terse observations in Metal Box Company's case as far as section 36(1) is concerned, the observations made in paragraph 3 of the said circular also appear to be unwarranted and untenable. A proper review of the Supreme Court decisions to which we have adverted during the course of this judgment would seem to indicate that permissible deductions are not restricted to those indicated in sections 30 to 37, that such a provision is not for a contingent liability in the sense of the liability similar to that of the assessee-company in Indian Molasses Company's case but must be properly regarded as, if scientifically estimated, a provision for a present liability which is allowable in the case of an assessee which keeps its accounts on the mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wealth-tax Officers or to the Commissioner in exercise of their quasi-judicial functions. The provisions contained in section 13 of the Wealth-tax Act then under consideration by the Supreme Court were similar to the provisions contained in section 119 of the Income-tax Act, 1961. Mr. Joshi referred us to the relief granted by the Supreme Court in the said case and pointed out that inasmuch as the Commissioner had merely followed the impermissible directives given by the Central Board of Direct Taxes, the order of the Commissioner was quashed and the matter was remanded back to the Commissioner with a direction that he had to dispose of the revision application according to law and uninfluenced by any instructions or directions by the Central Board of Revenue (as it was then called). It was submitted by Mr. Joshi that in the instant case also the Income-tax Officer may be directed to dispose of the contention raised by the company in the matter of its claim for the deduction being allowed uninfluenced by the second circular which expressly directs the Income-tax Officers to complete the pending assessments in the light of the instructions contained in the said circular. We were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of possibility, the company and similar assessees would be constrained to avail of their remedies under the Income-tax Act of going in appeal to the Appellate Assistant Commissioner, in the first place, and, thereafter, in second appeals to the Income-tax Appellate Tribunal, with further reference to the High Court which would result in multiplicity of judicial proceedings which are both time-consuming and expensive, which is a result necessary to be avoided, and which could be avoided only if a clear writ as sought for by the petitioner is granted and not merely by following the course which was followed by the Supreme Court in Sirpur Paper and Orient Paper Mills' case. Our attention was also drawn in this connection to the reply given by the Income-tax Officer to the specific allegations made in paragraph 5 of the petition. It appears, to us that in this case there are exceptional circumstances which did not exist in either the Sirpur Paper Mills' case or in Orient Paper Mills' case and that it would not be proper, therefore, merely to quash the second circular issued by the Central Board of Direct Taxes, leaving it to the Income-tax Officer to complete the income-tax assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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