Dismissing the appeal of the revenue the Court held that , on  the issue of the Assessing Officer’s attempt to tax the profits of the assessee’s units situated in the U. S. A. and the U. K., the Department having accepted the order of the Tribunal in the earlier assessment years it was not open to it to pick a certain year for carrying the challenge further before the Assessing Officer. The Commissioner (Appeals) and the Tribunal had referred to the earlier orders in the case of the assessee and the Double Taxation Avoidance Agreement between the respective countries to conclude that such income was not taxable in the hands of the assessee in India.  Court held that  earlier year order of Appellate Tribunal  was accepted hence  precluded from raising point for later year .

The assessee had received a subsidy. It did not raise the contention before the authorities below that such subsidy was towards capital account and, therefore, not taxable but raised it before the Tribunal. The Tribunal relied upon its order in the assessee’s case for the assessment year 1999-2000 and restored the issue to the Assessing Officer.  Dismissing the appeal of the  revenue the Court held that as long as the material existed on record, a contention raised by the assessee for the first time before the Tribunal was not to be barred. It was always open to the assessee to contend before the Assessing Officer by pointing out the relevant clauses of the subsidy that in law the subsidy cannot be treated to be towards revenue account. It would be equally open for the Revenue to oppose such a contention if so advised. The Assessing Officer and the Revenue authorities would have to take a decision in accordance with law.

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