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Issues Involved:
1. Whether the claim of exemption u/s 83 of the Income-tax Act, 1961, which was not made before the Income-tax Officer or the Appellate Assistant Commissioner, could be entertained u/s 154 of the Income-tax Act, 1961. Summary: Issue 1: Claim of Exemption u/s 83 The assessee, West Bengal State Warehousing Corporation, filed a return showing a total income of Rs. 92,578 for the assessment year 1967-68, but the assessment was made on a total income of Rs. 9,17,117. An appeal partially allowed by the Appellate Assistant Commissioner led to an application u/s 154 by the assessee on October 1, 1973, claiming exemption of income from taxation. The Income-tax Officer rejected this application on November 2, 1973, stating that the claim for exemption was not made during the assessment or before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, however, accepted the assessee's contention on October 3, 1974, citing a glaring and obvious mistake of law, as the income from warehousing was exempt. The Revenue appealed to the Income-tax Appellate Tribunal, which held that for exemption u/s 83, it must be proven that the assessee was constituted under the law for marketing commodities, and the exemption would be limited to income derived from letting godowns or warehouses. The Tribunal concluded that the claim for exemption for the assessment year 1967-68 could not be allowed as a mistake apparent from the record u/s 154. Legal Question: The legal question referred to the court was whether the Appellate Tribunal was justified in holding that the claim of exemption u/s 83, not made before the Income-tax Officer or the Appellate Assistant Commissioner, could not be entertained u/s 154. Arguments: Dr. Pal, representing the assessee, argued that the claim for exemption was made as soon as the mistake was detected, and the exemption for subsequent years was accepted by the Income-tax Officer. He cited the profit and loss account showing Rs. 5,72,323 as income from warehousing, which should be exempt from taxation. Mr. Bagchi, representing the Revenue, argued that the applicability of exemption u/s 83 required an investigation of facts, and since the claim was not made before the Income-tax Officer or the Appellate Assistant Commissioner, it could not be considered a mistake apparent from the records. Court's Analysis: The court examined whether the assessee could claim exemption in a proceeding u/s 154. It noted that the mistake should be glaring and obvious, and not a debatable question. The court found that the assessee, a statutory corporation established under the Warehousing Corporations Act, 1962, was entitled to exemption on its income from warehousing, which was not disputed for subsequent years. The court held that the Income-tax Officer had all the necessary materials to determine the exemption and that the failure to claim it initially did not preclude rectification u/s 154. Conclusion: The court concluded that the income of Rs. 5,72,323 from warehousing was exempt and that the Income-tax Officer had no jurisdiction to assess such income. This error was glaring and obvious and could be rectified u/s 154. The question was answered in the negative and in favor of the assessee, restricting the exemption claim to Rs. 5,72,323. Concurrence: DIPAK KUMAR SEN J. concurred with the judgment.
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