COMMISSIONER OF INCOME TAX Vs. SHIVAJI WORKS LTD.

JUDGEMENT

(1.) The respondents have raised a preliminary objection, that considering the valuation for the purpose of filing appeal and the notifications by C.B.D.T. issued and the judgments of this court the appeal as filed is not maintainable and ought to be dismissed. On the other hand, on behalf of the Appellants, their learned counsel submits that on merits the issue is squarely covered in favour of the revenue by the judgment of the Supreme Court in Britannia Industries Ltd. Vs. Commissioner of Income Tax, 2005 278 ITR 546 (SC). The Apex Court by the said judgment has held that the the expenses for maintenance of guest house are not subject to exemption or disallowed under section 37(4) of the Income Tax Act. It has also been pointed out that the circular itself provides that when the issue is recurring, an appeal can be preferred. On behalf of the Respondents, their learned counsel has drawn our attention to the judgments of this court in the Commissioner of Income Tax Vs. Chemco Colour Company 254 ITR 565 (Bom). A learned Bench of this court was considering the circular No. 279/126/98-IT dated 27.3.2000. The learned Bench after considering the purport and object of the said circular was pleased to hold that considering the policy decision as enumerated in their circular the appeal as filed was contrary to the instructions issued in the circular which is binding on the revenue. Our attention was next invited to the judgment in Commissioner of Income Tax Vs. Zoyeb Y. Topiwala, (2006) 284 ITR 379 (Bom) where also what was under consideration was a similar circular. The learned Bench relied in the case of Chemco Colour and another and held that even in respect of old matters the instructions would be binding and accordingly dismissed the appeal. Reference was also made to the judgment of the Commissioner of Income Tax Vs. Pithwa Engg. Works, Vol. 276 ITR 519 (Bom) where the learned Bench took a view that the circular is applicable even to the old reference which are still undecided. We may point out that in that case, in view of the circular reference as made was not answered.

(2.) On behalf of the appellant, their learned counsel points out that inspite of these judgments the learned Bench in cases where the matter was covered by the Judgment of the Supreme Court and this court has been hearing the appeals and our attention is invited firstly to the order dated 21.7.2005 in M/s. Desa Hospital (ENT Section) Vs. The Commissioner of Income Tax, in Income Tax Reference No. 100 of 1998 as also to the order dated 4.10,.2005 in the case of Commissioner of Income Tax Vs. Advani Oerlikon in Income Tax Reference No. 181 of 1998. Our attention is also invited to the Judgment of the Punjab High Court in the case of Commissioner of Income Tax Vs. Abhishek Industries Ltd. (2006) 286 ITR 1 (P&H) to contend that the appeal by revenue in cases covered by the judgement of the High Court and Supreme Court will still be maintainable irrespective of the circular. It is also pointed out that the Judgement of this court had been considered by the learned Bench of the Punjab and Haryana High Court.

(3.) We may refer to Para 3 of the Circular dated 24 th October, 2005 which reads as under :