(a) Income‑tax‑‑‑

‑‑‑‑Appellate Tribunal‑‑‑Powers‑‑‑Reference‑‑‑Tribunal passing orders to give effect to opinion of High Court‑‑‑Subsequent decision by Full Bench of High Court in case of another assessee taking a different view‑‑‑Tribunal has no power to implement decision of Full Bench‑‑‑Indian Income Tax Act, 1961,S.260.

(b) Income‑tax‑‑‑

‑‑‑‑Depreciation‑‑‑Reference‑‑‑Cinema theatre‑‑‑Decision of High Court in case of assessee that cinema theatre is a building for purposes of grant of depreciation‑‑‑Subsequent Full Bench decision of High Court in case of another assessee that cinema theatre constitutes plant‑‑‑Tribunal has to grant depreciation in case of assessee treating cinema theatre as a building and not as a plant‑‑‑Indian Income Tax Act, 1961, Ss.32 & 260.

Section 260 of the Income Tax Act, 1961, makes it clear that as soon as a reference is made or answered, the Tribunal has to pass orders in the appeal on the basis of which the reference was disposed of. Thus, it is clear that once a reference application has been decided, the Tribunal has no other go, but to decide that question in accordance with the judgment of the High Court. The assessee cannot say that merely because the Full Bench of the High Court in the case of another assessee has taken another view, the Tribunal should automatically erase the decision in its reference and in its place substitute the judgment of the Full Bench. Further, under the provision of section 260, the High Court judgment as a whole is binding between the parties in a particular case.

The assessee was a firm which owned a cinema theatre. For the assessment years 1984‑85 and 1985‑86, the Assessing Officer allowed depreciation on the theatre building at the rate applicable to building. The contention of the assessee was that the building ought to have been treated as a plant and depreciation should have been given as a plant. The appeal filed by the petitioner was dismissed. On further appeal, the Tribunal held that the theatre building was a plant eligible for depreciation at the rates applicable to a plant. A reference was made by the Revenue which was answered in favour of the Revenue and against the assessee, holding that the building was entitled to depreciation applicable to buildings. Pursuant to the answer given by the Court, the Tribunal gave effect to .it under section 260(1) of the Act by order, dated May 19, 1997. Subsequently, the Full Bench of the High Court considered the question in another case, whether a theatre was a plant and by judgment, dated March 11, 1998 (CIT v. Hotel Luciya (1998) 231 ITR 492) overruled the earlier decision of the Division Bench and held that a theatre will also come under the category of plant. The assessee applied for a rectification of the orders passed under section 260(1). This was rejected. On a writ petition to quash the order and pass final orders in accordance with the decision of the Full Bench of this Court reported in CIT v. Hotel Luciya (1998) 231 ITR 492 (Ker.).

Held, dismissing the writ petition, that the order passed by the Tribunal was correct.

CIT v. Hotel Luciya (1998) 231 ITR 492 (Ker.); CIT v. Sasidhara Shenoy &. Bros. (1998) 231 ITR 489 (Ker.); CIT v. Tehri‑Garhwal State (1934) 2 ITR 1 (PC);‑East India Corporation Ltd. v. CIT (1975) 99 ITR 287 (Mad.); Jose T. Mooken v. CIT (No.2) (1979) 117 ITR 921 (Ker.) and Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT (1988) 174 ITR 579 (Ker.) ref.

P.G.K. Wariyar, P. Balakrishnan and K.S. Menon for Petitioner.

P.K.R. Menon and N.R.K. Nair for Respondents.

JUDGMENT

The above original petition has been filed for a writ of certiorari or other appropriate writ, order or direction quashing Exh. P.1 order passed by the second respondent and for a direction to the second respondent to pass final orders in I.T.As. Nos.32 and 237/Cock. of 1989, in accordance with the decision of the Full Bench of this Court in CIT v. Hotel Luciya (1998) 231 ITR 492.

The petitioner in this case is a partnership firm under the name and style, Sasidhara Shenoy & Bros. It is conducting a theatre. The first respondent‑Assessing Officer, for the assessment years 1984‑85 and 1985‑86 allowed depreciation on the theatre building of the rates applicable to the building. The case of the petitioner was that the building ought to have been treated as a plant and depreciation should have been given as a plant. An appeal filed by the petitioner was dismissed. On further appeal, the Tribunal held that the theatre building was a plant eligible for depreciation at the rates applicable to a plant. The Revenue did not accept the decision of the Tribunal. Accordingly, a reference was made to this Court under section 256 of the Income Tax Act, 1961. The reference was disposed of by judgment, dated September 3, 1996, in I.T.R. Nos.100 and 101 of 1992 (CIT v. Sasidhara Shenoy & Bors. (1998) 231 ITR 489). The reference was answered in favour of the Revenue and against the assessee holding that the building is entitled to depreciation applicable to buildings. Pursuant to the answer given by this Court, the second respondent gave effect to it under section 260(1) of the Income‑tax Act by order, dated May 19, 1997.

It appears that subsequently, the Full Bench considered the question whether a theatre was a plant and by judgment, dated March 11, 1998 (CIT v. Hotel Luciya (1998) 231 ITR 492) overruled the earlier decision of the Division Bench (see (1998) 231 ITR 489) and held that a theatre will also come under the category of plant. Thereafter, the present petitioner moved before the second respondent in its two appeals for the two years, Miscellaneous Petitions Nos.106 and 107 of 1998 for rectification of the orders passed thereon under section 260(1). This was considered by the officer and it ‑was held that it is not legally possible to rectify as prayed for. Accordingly, Exh. P.2 order was passed by the Income‑tax Appellate Tribunal, Cochin Bench. In paragraph 3 of the order, it is stated thus:‑‑

"We are unable to agree with the contention of the assessee that in view of the Full Bench decision in the case mentioned (supra) there was an apparent mistake in the order of the Tribunal, dated May 19, 1997, passed under section 260(1). The Tribunal passed the order under section 260(1), on May 19, 1997, to give effect to the judgment of the High Court of Kerala as it was binding on this Bench of the Tribunal. Hence, when the Tribunal passed the order under section 260(1) on May 19, 1997, the matter had reached finality and since such order was passed as a result of the judgment of the High Court it cannot be said that the impugned order suffers from any mistake apparent from the record requiring rectification in the light of the Full Bench decision rendered by the High Court on the identical issue in the case of another assessee. In this view of the matter, we hold that the order passed by the Tribunal on May 19, 1997, under section 260(1) of the Income‑tax Act, does not suffer from any mistake apparent on the record warranting rectification. "

Shri P.G.K. Wariyar, appearing for the petitioner, submitted that it is axiomatic that a subsequent change of law is a good ground for review and on that basis, submitted that the view of the Full Bench was the correct law and on that basis, the Tribunal should have corrected the decision. Learned counsel brought to my notice the decision of the Division Bench of this Court in Kil Kotagiri Tea and Coffee Estates Co. Ltd. v: ITAT (1988) 174 ITR 579. In that case, the facts are as follows (headnote):‑‑

"An order of assessment based upon an interpretation or application of law which is ultimately found to be wrong in the light of judicial pronouncements rendered subsequently, discloses a mistake apparent from the record. When the Court decides a matter, it does not make the law in any sense but all it does is that it interprets the law and states what the law has always been and must be understood to have been. Where an order is made by an authority on the basis of a particular decision, the reversal of such decision in further proceedings will justify a rectification of the order based on that decision.

A binding decision rendered by a Court is always retrospective and the decision which is overruled was never the law."

The above decision will not help the petitioners, because in that case, the Tribunal passed an order relying on an earlier decision of a Single Judge of this Court. Subsequently, the decision of the single Judge was reversed. It was in that context that an application was filed for rectification. Another decision cited was East India Corporation Ltd. v. CIT (1975) 99 ITR 287 (Mad.). The facts in that case also show that it has no relevance for our purpose.

The question involved is whether a person can ask the Commissioner of, Income‑tax to delete the decision of the High Court on the basis of which a reference has been disposed of by another decision on the ground that such a decision is the correct position of law. It is not difficult to state that a subsequent binding decision will be a good ground for review. But, in the present case, we are not concerned with the question of review as it is commonly understood. It is true that the decision in the reference application made by the petitioner has not been followed by the Full Bench and the law declared by the Full Bench is now the law. The question is whether on the basis of the Full Bench decision the Tribunal can be compelled to change its judgment under section 260(I) of the Income‑tax Act, which is stated thus:‑‑

"The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar of the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment."

Thus, it is made clear that as soon as a reference is made or answered, the Tribunal has to pass orders in the appeal on the basis of which the reference was disposed of. Thus, it is clear that once a reference application has been decided, the Tribunal has no other go, but to decide that question in accordance with the judgment of the High Court. The assessee cannot say that merely because the Full Bench has taken another view, the Tribunal should automatically erase the decision in reference and in its place substitute the judgment of the Full Bench. I am afraid, this is not the intention. According to me, once an answer is given to a reference, the disposal of the appeal will depend upon that reference. Further, under the provisions of section 260, the High Court's judgment as a whole is binding between the parties in a particular case. It has been held in CIT v. Tehri Garhwal State (1934) 2 ITR 1 (PC) that if the judgment expounds a wrong construction of the Act, an appeal against it is open, and there is no other procedure by which it can be corrected. "An application for review of a judgment passed by a High Court in a reference is not maintainable, for the Tribunal which determines the questions referred under section 256 does not act as a Civil Court so as to attract the provisions of the Code of Civil Procedure", vide Jose T. Mooken v. CIT (No.2) (1979) 117 ITR 921 (Ker.).

In the above view of the matter, I am of the view that Exh, P.2 order passed is correct. The original petition is dismissed.

M.B.A./589/FC??????????

Petition dismissed.