1982 PLP 314 (PTD)

G. P. SINGH, C. J.‑This is a reference under section 256(1) of the I. T. Act, 1961. The question of law referred is as follows: "On the facts and in the circumstances of the case, when an assessee is found eligible for relief under section 80‑J of the Income‑tax Act in respect of an assessment year whether the Income‑tax Officer is competent to disallow the same for any or all the four subsequent years ?" For the assessment year 1973‑74, the assessee was granted relief under section 80‑J of the I. T. Act. It was found by the I. T. O. in that case that the assessee made a substantial expansion by the installation of a new plant and machinery as well as by the construction of a new building in the accounting year relevant to the assessment year 1973‑

74. Reliance was placed by the I. T. O. in granting the relief under section 80‑J on a ruling of the Calcutta High Court in C. L T. v. Indian Aluminium Co. Ltd. ((1973) 88 I T R 257). For the assessment years 1974‑75 and 1975‑76, the I. T. O. declined to grant the relief under section 80‑J to the assessee on the view that the expansion of an existing undertaking did not make it a new undertaking and the assessee was not entitled to the relief under section 80‑J. On appeal, the A. A. C. granted the relief under section 80‑J to the assessee and the same view was taken by the Tribunal in further appeal. Both these authorities were of opinion that it was not open to the I. T. O. to take a different view for the assessment years 1974‑75 and 1975‑

76. It is contended by the learned counsel for the department that the principle of res judicata has no application to proceedings under the I. T. Act and the findings reached for one particular assessment year cannot be held to be binding in the assessment proceedings for a subsequent year. As a general rule, there can be no dispute with this principle. But this general rule is subject to the qualification that a finding reached in the assessment proceedings for an earlier year would not be reopened in a subsequent year if it is not arbitrary or perverse, has been arrived at after due enquiry and if no fresh facts are placed in the subsequent assessment year. This is on the principle that there should be finality and certainty in all litigations including litigations arising out of the I. T. Act (see Burmah Shell Refineries Ltd. v. G. G. Chand ((1976) 61 I T R 493 (Bom.)) and C. I. T. v. Dalmia Dadri Cement Ltd. ((1970) 77 I T R 410 (P & H)). In the instant case, no fresh material was brought in, in the assessment proceed ings for the years 1974‑75 and 1975‑76, to show that the finding reached by the

1. T. O. in the assessment proceedings for the year 1973‑74, that the assessee had installed new plant and machinery and had constructed a new building, was in any way erroneous. As earlier pointed out by us, I. T. O., in granting the relief for the year 1973‑74, had relied upon the decision of the Calcutta High Court in Indian Aluminium Co.'s case ((1972) 88 I T R 257). That decision was confirmed in appeal by the Supreme Court in C. I. T. v. Indian Aluminium Co. Ltd. ((1977) 108 I T R 367). The Supreme Court in Textile Machinery Corp. Ltd. v. C. I. T. ((1977) 107 I T R 195) held that the relief under section 80‑J could be obtained also when new plant and machinery were erected for producing the same commodity which the assessee was producing earlier. It cannot, therefore, be said that the I. T. O., in granting the relief under section 80‑J for the assessment year 1973‑74, proceeded upon a wrong interpretation of the section. On these facts and circumstances, it was not open to the I. T. O. in dealing with the assessment for the years 1974‑75 and 1975‑76, to refuse to grant the relief under sec tion 80‑J to the assessee. We are informed that the relief under that section has already been granted to the assessee for the years 1976‑77 and 1977‑

78. For the reason given above, we answer the question as follows :‑ "On the facts and in the circumstances of the case, the Income‑tax Officer was not competent to disallow the relief under section 80‑J for the assessment years 1974‑75 and 1975‑76." There will be no order as to costs of this application. Question answered in the negative.