2013 (10) TMI 71 - HC - Income Tax

Raising of new grounds belatedly i.e. raising of stale issues Held that - Assessee never challenged the computation made under Section 115JA or challenged or questioned the assessment order on the ground that adjustments had not been made, as required and mandated by law - This issue/question was not raised before the tribunal as the petitioner, who appears, did not want to raise the said contention and issue - Allowing the appellant to now question the computation will be allowing a person to raise stale issue and to question a decision which was accepted Appellant-assessee should not be permitted and allowed to raise this ground belatedly at this stage Decided against the Assessee.

Issues:
1. Adjustment for computing book profits under Section 115JA of the Income Tax Act.
2. Benefit of Section 80HHC not granted.
3. Disallowance under Section 40A(3).
4. Disallowance of claim for gratuity liability.
5. Disallowance of expenditure as entertainment.
6. Imposition of Minimum Alternate Tax (MAT) under Section 115JA.
7. Disallowance under Section 43B.

Analysis:

1. The appellant challenged the adjustments made for computing book profits under Section 115JA of the Income Tax Act for the Assessment Year 1997-98. The Assessing Officer had computed 30% of the book profit at Rs.4,07,72,346 and directed the levy of interest under Sections 234B and 234C, along with initiating penalty proceedings under Section 271(1)(c). The appellant raised multiple grounds in the appeal before the Income Tax Appellate Tribunal, including the non-granting of the benefit under Section 80HHC.

2. The appellant contested the disallowances made by the Assessing Officer, particularly challenging the disallowance under Section 40A(3) and the disallowance of the claim for gratuity liability. Additionally, the appellant disputed the disallowance of 50% of the expenditure categorized as entertainment, arguing that it did not fall under Section 37(2) for disallowance.

3. The imposition of Minimum Alternate Tax (MAT) under Section 115JA was a significant issue raised by the appellant. The appellant argued that the MAT imposed was illegal and unauthorized by law, emphasizing that the credit under Section 115JAA should have been considered, and non-payment of any amount towards interest-free credit should not be deemed as tax payable. The appellant sought the setting aside and quashing of the MAT imposed.

4. Another issue raised was the disallowance under Section 43B, which the appellant sought to be deleted instead of being remanded to the Assessing Officer. The appellant contended that the authorities erred in disregarding the provisions for granting credit under Section 115JAA and denying the refund with interest, especially considering the non-existence of liability to MAT during the subsequent five years following the relevant assessment year.

5. Despite the appellant's contentions, the High Court dismissed the appeal, noting that the appellant did not challenge the computation made under Section 115JA during the tribunal proceedings. The Court highlighted that the appellant's failure to raise this issue before the tribunal precluded them from raising it in the fourth appeal. The Court emphasized that permitting the appellant to question the computation belatedly would amount to raising a stale issue and questioning a previously accepted decision, leading to the dismissal of the appeal for the Assessment Year 1997-98.

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