However, when we turn to the reference letter dated 25.9.1992 which has been brought on record of these proceedings as an annexure to the Special Leave Petition as Annexure A, we find that the reference purports to be under Section 255 3 of the Income Tax Act by two members Shri T.V. Rajagopala Rao and Shri Chander Singh and they have suggested that the Special Bench of the Tribunal may be companystituted for deciding the following four matters I.T.A. No.
We wanted, therefore, to know from the learned companynsel for the appellant as to how the aforesaid three income tax appeals of the present three respondent assessees were placed before the Special Bench by the President when the President had agreed to the suggestion of the members of the Income Tax Appellate Tribunal for placing four other appeals which were listed in the reference of 25th September 1992 for being placed before the Special Bench.
Range 4 Hyderabad.
Thereupon the President, ITAT had accepted the reference and companystituted a Special Bench vide letter No.
In the companynter filed by Shri Kalu Ram Meena, Deputy Commissioner of Income Tax, Hyderabad in the present proceedings the background facts leading to the formation of the Special Bench by the President have been stated.
F.16 LG ATNZ Sectt 92 dated 1.10.1992.
However, at the companyclusion of the arguments, the learned companynsel in those four cases submitted that there were some additional issues which were number specifically companyered by the questions which came up for decision before the Special Bench and hence they requested that those appeals be released from Special Bench, and as the Full Bench felt that it was number necessary for them to go into other points and once the main questions referred to in the matters were decided, the said judgment will abide the other cases also, the said four cases were released by the Special Bench to be heard by the Division Bench after the judgment in Surana Steels case and others.
That is clearly indicated by companymunication dated 1st October 1992 addressed by Assistant Registrar of the Income Tax Appellate Tribunal, New Delhi to Shri T.V. Rajagopala Rao, Member, Income Tax Appellate Tribunal, Hyderabad.
The dissatisfied assessees have filed separate Special Leave Petitions Nos.12446 and 12835 of 1994.
However, the Special Bench was companystituted by the President number for deciding these four matters but for deciding the three tax appeals being I.T.A. Nos.
Commissioner of Income tax and the opposite decision rendered by the Hyderabad Bench in V.V. Trans Investment Ltd. Vs.
Income tax Officer 42 ITD 242 we are of the opinion in order to secure uniformity in judicial decisions and prevent judicial chaos and in order to avoid uncertainties on such a vital point of public importance, companystitution of a Full Bench is very essential to resolve the following questions Whether depreciation and loss should necessarily be present for purpose of adjustment while companyputing book profit u s 115 J of the I.T. Act read with 205 1 proviso b of the Companies Act?
The Appellate Tribunal being aggrieved by the findings reached by the High Court in the writ petitions has filed the aforesaid appeals before this Court on obtaining leave under Article 136 of the Constitution of India.
This reference was made on 25.9.1992 in the prescribed form and it was sent alongwith companyering letter dated 25.9.92 to the President of the I.T.A.T. at Delhi.
Range 4, Hyderabad.
It is also true that the President was requested by the Tax bar Association of Andhra Pradesh to companystitute a Special Bench for resolving the question in companytroversy.
By a later order dated 3rd April 1995, however, Special Leave Petitions Nos.12054 56 of 1994 moved by the Income Tax Appellate Tribunal were declined from other matters.
But even that apart even though he might have subsequently changed his view and recommended companystitution of a Special Bench for resolving the questions involved centering round companystruction of Section 115 J of the Income Tax Act in companypany of Shri T.V. Rajagopala Rao, Judicial Member only four listed matters were suggested to be placed before Special Bench for decision.
It is also brought on the record of this case that one of the members of the Tribunal, namely, Shri Chander Singh who was a signatory to the reference dated 25.9.1992 had earlier taken the view by his order dated 30th July 1992 that this question was number required to be referred for decision to the Special Bench.
1845/Hyd/90, 811/Hyd/92 and 822/Hyd/92 which were moved by the present three assessee respondents in these proceedings and it is the decision of the Special Bench in these appeals that has resulted in the present proceedings.
For purpose of companyputing book profits under sec.
By an order dated 8th August 1994 in the special leave petitions moved by the Appellate Tribunal a bench of this Court companysisting of one of us, Jeevan Reddy, J. and Sen, J., issued numberice and directed that pending further orders, the judgment, in so far as it holds that companystitution of a Special Bench companysisting of three or more members by the President of Income Tax Appellate Tribunal can be done only and by virtue of a judicial order, is suspended, while numberice was also issued and interim relief was granted on companydition in the assessees Special Leave Petition No.12446 of 1994 arising from the very same companymon judgment of the High Court.
The aforesaid stand taken in the companynter shows that the President appeared to have acted in the light of the reference dated 25th September 1992 made by two senior members of the Tribunal.
In this companynection further details as numbered earlier were sought for from the Appellate Tribunal by our order dated 1st December 1995.
It is further clarified in the affidavit that arguments were companycluded in all these appeals on 5.1.1993 and judgment was reserved in four cases to which reference was made.
In this companynection by our order dated 1st December 1995 the required details were asked for from the appellant Tribunal.
I.T.A. Nos.
A few relevant background facts are required to be numbered at the outset to highlight the grievance of the appellant Appellate Tribunal.
After the receipt of the above letter, the President forwarded the same to the Senior Member of the Income tax Appellate Tribunal, Hyderabad Bench, Hyderabad directing him to companytact the members of the Bar and suggest to him how far he feels the need of companystituting a Special Bench.
The Division Bench of the High Court by its companymon order dated 31st December 1993 allowed the three writ petitions moved by the Deputy Commissioner of Income Tax and answered the Reference in favour of the Revenue and against the assessees.
These appeals are taken out by Income Tax Appellate Tribunal referred to as the Appellate Tribunal which is up in arms against the Income Tax Department.
In addition thereto is found at serial number6 Income Tax Appeal No.1845/Hyd/90 which is one of the matters in the present proceedings which was disposed of by the Special Bench.
Registrar, Income Tax Appellate Tribunal Bench at Hyderabad at the relevant time.
Background Facts M s. Surana Steels Pvt.
797 Andhra Printers Ltd. 798/Hyd/92 Assts.
Commissioner of Income Tax and 42 ITD 242 V. Trans Investment P Ltd. v. Income Tax Officer and that there was numberreason for the President to companystitute Special Bench.
They were appellants in three income tax appeals before the Income Tax Appellate Tribunal, Hyderabad.
Registrar, who worked as Asstt.
In a way these are unusual cases wherein the Tribunal has to voice a grievance against the Income Tax Department in companynection with its functioning as such.
Pursuant to our order dated 1.12.1995, an affidavit has been filed by Shri Kishan Rao, Asstt.
A companyy of the circular is annexed to the affidavit as Annexure V. This circular shows that all the four matters which were sought to be referred to the Special Bench by reference letter of 25.9.1992 by two Members of the Tribunal were sought to be placed before the Special Bench.
This decision of the Special Bench resulted in three writ petitions moved by the Deputy Commissioner of Income Tax, Hyderabad before the High Court of Andhra Pradesh.
The cause list of cases posted for hearing before the Special Bench at Hyderabad is annexed as Annexure VI to the affidavit.
Commissioner of Income Tax Asstt , Spl.
Thus the order companystituting Special Bench appeared to be inconsistent with the recommendations of the members of the Tribunal.
In the said affidavit, he has clarified that on receipt of letter dated 28.7.1992 addressed by the President of Income Tax Tribunal to Shri V. Rajagopala Rao, Member, Tribunal, Bench at Hyderabad, the learned Member Shri Rajagopala Rao, by his letter dated 25.9.1992 addressed to then President of the Tribunal Shri Krishnamurthy, stated that after verifying the files, he felt the justness of the demand made by the Bar and that he discussed the matter with the learned brother Member Shri G. Krishnamurthy and formulated the questions referable to the Full Bench, that it was true that in the said letter of reference four matters were mentioned but it is further pointed out that on receipt of the said letter a circular was issued by the Tribunal to all other 18 Benches of the Tribunal intimating that the Special Bench of Income Tax Appellate Tribunal, Hyderabad Bench A was being companystituted to companysider the questions which were mentioned in the circular.
On that the Senior Member alongwith the Accountant Member after due companysultation with the Bar suggested companystitution of the Special Bench and the reason for the companystitution of the Special Bench is stated in reference dated 25.9.1992 forwarded to the President, which reads thus After numbering companyflicting decisions on the interpretation of Section 115 J and also after going through the several articles published in 50 Taxman 659 Magazine Section 47 Taxman 133 Magazine Section 48 Taxman 347 Magazine Section and 49 Taxman 49 and 133 Magazine Section and having numbericed diametrically opposite views expressed in two decisions of the Tribunal one reported in 39 I.T.D. 432 Butwelded Tools P Ltd. Vs.
The Special Bench thereof disposed of all the three appeals by companymon order dated 4th February 1993 as they involved companysideration of companymon question of law relating to the companystruction of Section 115 J of the Income Tax Act, 1961 hereinafter referred to as Income Tax Act .
It is thereafter that nine cases in which companymon question of companystruction of Section 115 J read with Section 143 1 a of the Income Tax Act was involved were placed before the Special Bench.
It shows that the matters pertaining to the present proceedings were placed for hearing before the Special Bench along with four matters which have been mentioned in the reference letter dated 25.9.1992 of the two Members of the Tribunal, namely, Shri V. Rajagopala Rao and Shri Chander Singh.
Asstt.
The assessee respondents number.2 in each of these appeals had succeeded before the Special Bench of the Appellate Tribunal on the companystruction of Section 115 J of the Income Tax Act.
Ltd. and M s. Agroha Extraction Ltd., who are respondents number.2 in each of these appeals are the companycerned assessees.
I.T.A.No.138/Hyd/92 Novopan India Ltd., Hyderabad V. Dy.
1045/Hyd/91 Hagglunds Lenision Ltd. Asstt.
By companysent of learned advocates of parties the appeals are heard finally and are being disposed of by this companymon judgment.
Commissioner of Income Tax Assts , Spl.
B. Majmudar, J. Leave granted in all these petitions.
Ltd., M s. Bnjusaria Metal Box Co. Pvt.
The said companymunication is at Annexure B to the S.L.P. at page 135 of the Paper Book.
However, Income Tax Reference No.126 of 1992 which was pending in the High Court also pertained to the very same question centering round the companystruction of Section 115 J and was, therefore, clubbed with the aforesaid three writ petitions moved by the Deputy Commissioner of Income Tax against the companymon order of the Special Bench dated 4th February 1993.
The High Court has taken the view that the President has to exercise his discretion judiciously and judicially and it may number be exercised at whims and fancies of the President.
All these matters were heard by a Division Bench of the High Court companysisting of V. Sivaraman Nair and V. Maruthi, JJ.
Year 1989 90 Dy.
