COMMISSIONER OF INCOME TAX Vs. PARK HOTEL PVT

JUDGEMENT

(1.) THIS reference under s. 256(1) of the IT Act, 1961 relates to the asst. yr. 1979 -80. The facts relating to this reference are that the assessee -company was the owner of a leasehold right in the premises at Park Street, Calcutta. In the previous year relevant to the asst. yr. 1971 -72, the assessee -company parted with its lease -hold right in a portion of the said premises in favour of M/s. Surendra Overseas Ltd. for a sum of Rs. 63,13,000 for which no registered deed of conveyance was executed. The income from the said lease -hold right was assessed by the ITO in the instant assessment year under the head income from house property. This was challenged in appeal before the CIT(A) following earlier order on this issue in his order dt. 13th December, 1982 directed the ITO to assess the income under the head business. The ITO passed the assessment order giving effect to the direction of the CIT(A) on 21st February, 1983.

(2.) BEING aggrieved, the assessee again preferred an appeal before the CIT(A). The CIT(A) by his order dt. 8th February, 1984 set aside the order of the ITO dt. 21st February, 1983 and directed him to exclude the income of M/s. Surendra Overseas Ltd. from the assessment of the assessee. The CIT(A) also directed that the total income in the case of the assessee -company should be computed with reference to its profit and loss account and balance sheet. This order of the CIT(A), dt. 8th February, 1984 was then appealed against by the Department before the Tribunal. The Tribunal passed their order on the said appeal on 3rd October 1985. In the meantime the ITO gave effect to the order of the CIT(A) dt. 8th February, 1984 on 6th April, 1984. The assessee was again, aggrieved by the order of the ITO on 6th April, 1984 and went in for further appeal before the CIT(A). The CIT(A) again passed his order on 8/9th July, 1984. In passing the order dt. 8/9th July, 1984 by the CIT(A), the CIT(A) did not afford any opportunity of hearing of the ITO. Therefore, the Department the preferred another appeal before the Tribunal against the order of the CIT(A) dt. 8/9th July, 1984. The assessee also filed cross -objection to the Department appeal being C.O. No. 163(Cal)/1984. On this appeal by the Departmental in ITA No. 1877 of 1984, the Tribunal, Calcutta on hearing contentions of both the parties passed their order dt. 9th May, 1986 setting aside the order of the CIT(A) directing him for rendering fresh decision according to law after giving due opportunity of hearing to the assessee and to the ITO.

(3.) AT this stage we may mention that this reference has arisen out of the fresh order passed by the Tribunal on 24th July, 1987 after recalling the earlier order dt. 19th May, 1986. The Revenue has not challenged the action of the Tribunal in recalling its earlier order dt. 19th May, 1986. However, the questions which have been referred relate only to the issue as to whether the Tribunal was justified in recalling its earlier order passed on 19th May, 1986. In our view, these questions are misconceived as they do not arise out of the appellate order of the Tribunal. These issue arise out of the order passed by the Tribunal on the miscellaneous application, which, as we have said has not been assailed by the Revenue. No question was raised or referred as on the merits of the findings and conclusion of the Tribunal contained in the fresh appellate order dt. 24th July, 1987. In the fresh appellate order dt. 24th July, 1987 the Tribunal held that the CIT(A) rightly directed the ITO to consider afresh the claim for depreciation, audit fees and interest in accordance with law. Accordingly, the appeal was dismissed and the cross -objection was allowed only to the extent that the assessee was entitled to the deduction on account of depreciation, audit fees and interest which shall be computed by the ITO. After the said order was given effect to the CIT(A) passed an order on 29th December, 1988 alongwith the appeals for the asst. yrs. 1980 -81, 1981 -82 and 1982 -83. The Revenue took up this matter before the Tribunal and the Tribunal dismissed the appeals by the order dt. 5th August, 1991. The Revenue being aggrieved made an application under s. 256(1) of the IT Act, 1961 and the reference has been made on certain questions of law which are as follow : For the asst. yrs. 1979 -80 to 1982 -83 :