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2001 (2) TMI 21 - HC - Income TaxAssessment By Intimation, Powers Of Assessing Officer - 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in upholding the decision of the learned Commissioner of Income-tax (Appeals), directing the Assessing Officer to allow deduction under section 32AB? - 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that the issue of claim under section 32AB of the Act is debatable even though the provisions of sections 32A(8C) and 32AB(10) of the Act are very clear and these provisions have been further clarified by Circular No. 559, dated May 4, 1990 of the Central Board of Direct Taxes? - This is apart from the fact that as a result of regular assessment which would necessarily follow on objection being raised to adjustments under section 143(1)(a) or 143(1B), the claim of the assessee under section 32AB has been accepted by the Commissioner of Income-tax (Appeals) in regular assessment proceedings, that only remain binding. As such the issue in our opinion, is otherwise academic. This application, therefore, fails and is hereby rejected
Issues:
1. Refusal to refer questions of law under section 256(2) to the High Court. 2. Disallowance of deduction under section 32AB in the revised return. 3. Interpretation of section 143(1B) in relation to filing revised returns. 4. Debatable nature of the claim under section 32AB. 5. Decision of the Commissioner of Income-tax (Appeals) in regular assessment proceedings. Refusal to Refer Questions of Law: The Commissioner of Income-tax sought to refer two questions of law arising from the Tribunal's order to the High Court under section 256(2). However, the Tribunal denied the application under section 256(1) for the reference. The High Court upheld the Tribunal's decision, finding no error in rejecting the application. Disallowance of Deduction under Section 32AB: The assessee initially claimed a deduction under section 32AB in the revised return for the assessment year 1989-90. The Assessing Officer disallowed the claim under section 143(1B) without issuing a notice under section 143(2) or resorting to regular assessment under section 143(3). The Assessing Officer's reasons included the timing of the revised return and the assessee's choice to claim investment allowance initially. The Commissioner of Income-tax (Appeals) held that the Assessing Officer's grounds for disallowance were debatable, citing guidelines from the Central Board of Direct Taxes. The Tribunal affirmed the Commissioner's decision. Interpretation of Section 143(1B): Section 143(1B) applies when a revised return is filed after an intimation or refund has been issued under section 143(1). The provision allows for amendments to adjustments made under intimation. The Assessing Officer's reasoning for disallowing the deduction under section 32AB based on the revised return was deemed erroneous, as section 143(1B) permits filing a revised return after the original return's intimation. Debatable Nature of the Claim under Section 32AB: The Commissioner of Income-tax (Appeals) found the claim under section 32AB to be debatable, as all conditions were fulfilled by the assessee. The Tribunal agreed, emphasizing that adjustments should not be made on debatable issues. The regular assessment proceedings ultimately accepted the claim under section 32AB, rendering the issue academic. Decision of the Commissioner of Income-tax (Appeals) in Regular Assessment Proceedings: The Commissioner of Income-tax (Appeals) set aside the Assessing Officer's disallowance of the claim under section 32AB in regular assessment proceedings. This decision was binding, as it accepted the claim based on the fulfillment of all conditions. The High Court rejected the application, noting the debatable nature of the issues and the acceptance of the claim in subsequent proceedings.
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