BHAGAVATHI TEXTILES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the assessee's instance, the following questions have been referred to this court for opinion under Section 256(1) of the Income tax Act, 1961 (in short "the Act"), by the Income-tax Appellate Tribunal, Cochin Bench (in short "the Tribunal") :

(2.) BEFORE the Tribunal the stand of the assessee was that there was no case for disallowance of five per cent, of the bonus payment. Such plea was taken by placing reliance on the decision of the apex court in Shahzada Nand and Sons v. CIT, 1977 108 ITR 358. It was submitted that the Tribunal in later orders had followed the aforesaid decision. Reference was also made to the decision of this court in Jayasree Cashew Co. in O. P. No. 10393 of 1984 disposed of on January 17, 1989. The Revenue's stand was that when there was a specific direction given by the High Court in a restored appeal, the Tribunal could not travel beyond the specific direction. It is to be noted that in P. Alikunju's case, 1987 166 ITR 611, the following observation was made (page 615) :

(3.) THE decision of the apex court has a binding effect in terms of article 141 of the Constitution of India, 1950 (in short "the Constitution"). Now, the net result is that even though a consideration could have been made in the light of the decision of the apex court, because of non-challenge to the order passed by this court, a different conclusion has been arrived at which is at variance with the view expressed by the apex court. What is binding under Article 141 is the ratio of the decision and not any finding on facts. It is the principle underlying a decision which is binding. It is to be read in the context of the questions which arose for consideration. Judged in that background, the Tribunal's conclusions cannot be maintained.