1985 (3) TMI 53 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal was right in law in refusing to admit the two additional grounds of appeal raised by the applicant.
2. Whether the Tribunal was right in law in not admitting the additional ground No. 2 which did not require consideration of material not already on record.

Summary:

Issue 1: Refusal to Admit Additional Grounds of Appeal
The Tribunal refused to admit the two additional grounds of appeal raised by the assessee, stating that these grounds were not raised before the ITO or the AAC and did not arise out of the AAC's order. The Tribunal also found no evidence or material on record to prove that the expenditure referred to in the additional grounds was laid out wholly or exclusively by way of export expenditure or covered by clauses (i) to (ix) of s. 35B(1)(b) of the Act. The Tribunal relied on the Supreme Court decision in Addl. CIT v. Gurjargravures P. Ltd. [1978] 111 ITR 1, which held that new claims not made before the ITO cannot be raised for the first time before the Tribunal.

Issue 2: Non-Admission of Additional Ground No. 2
The Tribunal did not admit additional ground No. 2, which involved claims for expenditures such as printing and stationery, rent and taxes, salary and wages, telephone charges, West Bengal sales tax & surcharge, and bank interest. The assessee argued that these items were supported by evidence on record and that the claims were not new but an enhancement of the original claim under s. 35B of the I.T. Act, 1961. The Tribunal, however, maintained that there was no material or evidence on record to support such claims.

Court's Analysis:
The Court analyzed various precedents, including Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC), CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC), CIT v. Nelliappan [1967] 66 ITR 722 (SC), and others. The Court noted that the subject matter of the appeal before the Tribunal was the claim under s. 35B, and the assessee was only seeking to enhance or expand its original claim by including new items supported by evidence on record. The Court distinguished the present case from Gurjargravures' case [1978] 111 ITR 1 (SC), stating that the additional grounds were part of the same claim under s. 35B and supported by the statement of accounts filed before the ITO.

Judgment:
The Court held that the Tribunal erred in refusing to admit the additional grounds of appeal. The subject matter of the appeal was the claim under s. 35B, and the assessee was entitled to include new items in this claim. Therefore, the Court answered question No. 1 in the negative and in favor of the assessee. Consequently, question No. 2 did not require an answer.

Conclusion:
The Tribunal's refusal to admit the additional grounds of appeal was incorrect. The assessee's claim under s. 35B was valid, and the additional items were supported by evidence on record. The Court ruled in favor of the assessee, allowing the inclusion of new items in the claim under s. 35B.