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Issues involved: Reference u/s 256(2) of the Income-tax Act, 1961 regarding deduction disallowed by the Tribunal.
Summary: The High Court of Orissa addressed a reference u/s 256(2) of the Income-tax Act, 1961 initiated by the assessee. The case revolved around the disallowance of a deduction claimed by a cooperative society under the Orissa Cooperative Societies Act, 1962 for the assessment year 1975-76. The Income-tax Officer disallowed the claim for exemption, leading to an appeal by the assessee. The Appellate Assistant Commissioner allowed a partial exemption, which the assessee accepted without filing any further appeal. Subsequently, the Revenue appealed to the Income-tax Appellate Tribunal, and the Tribunal dismissed the appeal. The assessee then sought to challenge the decision by applying u/s 256(1) of the Act to have a case stated before the High Court. The main question before the High Court was whether the Tribunal was justified in not allowing the entire sum of Rs. 42,942 as a deduction since the assessee did not file any appeal or cross-objection regarding the disallowed amount. The assessee argued that the Tribunal had the power to grant relief even without an appeal or cross-objection. However, the Court held that the Tribunal's power is limited to what is provided under the statute and cannot grant relief in the absence of an appeal or cross-objection. Therefore, the Tribunal's decision to disallow the deduction was deemed legally correct. In conclusion, the Court ruled in favor of the Tribunal, stating that the assessee's failure to file an appeal or cross-objection precluded the Tribunal from granting the deduction. The judgment was unanimous, and no costs were awarded.
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