1996 (1) TMI 82 - HC - Income Tax

Assessing Officer, Assessment Order, Assessment Proceedings, Orders Passed, Original Assessment, Powers Of Tribunal, Reassessment Proceedings

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to consider a different issue not raised in the appeal.
2. Inclusion of dollar loan as part of the capital employed for relief under section 80J of the Income-tax Act, 1961.
3. Jurisdiction of the Income-tax Officer in modifying the computation of capital.

Detailed Analysis:

Issue 1: Jurisdiction of the Tribunal to consider a different issue not raised in the appeal
The first issue pertains to whether the Tribunal had the jurisdiction to consider and pronounce on an issue regarding the jurisdiction of the Income-tax Officer (ITO) in passing the order dated January 18, 1975, and the assessee's right to apply for rectification, even though the assessee had not filed an appeal or cross-appeal on this issue. The court held that a successful party can support the conclusion of the subordinate Tribunal in an appeal filed against such a decision on other grounds, even if decided against him. The court emphasized that since the question relates to jurisdiction, it goes to the root of the matter and can be raised for the first time before the Tribunal if the factual matrix is available on records. Thus, the Tribunal was within its rights to consider the jurisdictional issue.

Issue 2: Inclusion of dollar loan as part of the capital employed for relief under section 80J of the Income-tax Act, 1961
The second issue was whether the dollar loan could be treated as forming part of the capital employed by the assessee for the purpose of relief under section 80J of the Income-tax Act, 1961. The court noted that this question is covered by previous decisions in CIT v. Cochin Refineries Ltd. [1983] 142 ITR 441 and CIT v. Cochin Refineries Ltd. [1985] 154 ITR 345. However, the court decided not to address this question in detail since the reference could be resolved based on findings on other issues, specifically the jurisdictional issue.

Issue 3: Jurisdiction of the Income-tax Officer in modifying the computation of capital
The third issue involved the jurisdiction of the ITO in modifying the computation of capital in the order dated January 18, 1975. The court held that the ITO acted beyond its jurisdiction in modifying the relief granted under section 80J in the reassessment order dated March 11, 1974. The court reasoned that the findings in the reassessment order regarding the computation of relief under section 80J had attained finality and could not be changed in subsequent stages of the proceedings unless challenged by proceedings known to law, such as rectification under section 154 or reopening under section 147. The court also rejected the Department's contention that the order dated January 18, 1975, should be treated as an order under section 154, noting that the mandatory requirements of section 154(3) were not met, as no notice was issued to the assessee before modifying the computation.

Conclusion:
The court answered questions 1 and 3 in the affirmative, against the Revenue and in favor of the assessee, affirming the Tribunal's jurisdiction to consider the issue and the ITO's lack of jurisdiction in modifying the computation of capital. Consequently, the court declined to answer question 2, deeming it academic in light of the resolution of the other issues.