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Issues Involved:
1. Whether an appeal lies under section 21 of the Expenditure-tax Act against an order of rectification passed under section 31 thereof. Issue-wise Detailed Analysis: 1. Appeal under Section 21 Against Rectification Order under Section 31: The core issue was whether an appeal is permissible under section 21 of the Expenditure-tax Act, 1957, against an order of rectification made under section 31 of the same Act. The assessee filed returns for the assessment years 1964-65 and 1965-66 claiming permissible deductions. The Expenditure-tax Officer allowed deductions in excess of the claimed amount and later issued a notice to rectify this mistake under section 31. The rectification increased the taxable expenditure and the amount of expenditure-tax payable. The assessee appealed to the Appellate Assistant Commissioner (AAC) under section 21, which was dismissed on the grounds that section 21 does not allow appeals against rectification orders under section 31. The Appellate Tribunal upheld this decision, referencing the Gujarat High Court's decision in Mandal Ginning & Pressing Co. Ltd. v. CIT, which interpreted similar provisions under the Indian Income Tax Act, 1922. Analysis of Section 21 and Section 31 of the Expenditure-tax Act: Section 21 outlines the conditions under which an appeal can be made against orders of the Expenditure-tax Officer. Clauses (a) and (b) of sub-section (1) of section 21 were scrutinized to determine their applicability to rectification orders. Clause (a) allows appeals against the amount of taxable expenditure determined under the Act, and clause (b) against the amount of expenditure-tax determined as payable under the Act. The court noted that these clauses are not restricted by reference to any specific section of the Act, implying a broader scope. Comparison with Indian Income Tax Act, 1922: The court compared section 21 of the Expenditure-tax Act with section 30(1) of the Indian Income Tax Act, 1922. It was noted that section 30(1) specifically limits appeals to orders made under certain sections, excluding rectification orders under section 35. However, section 21 of the Expenditure-tax Act does not have such limitations, thus allowing for a broader interpretation. Judicial Precedents and Reasoning: The court referred to the Gujarat High Court's decision in Mandal Ginning & Pressing Co. Ltd. v. CIT, which restricted appeals against rectification orders under the Indian Income Tax Act, 1922, due to the specific wording of section 30(1). However, it distinguished this case by noting that section 21 of the Expenditure-tax Act is worded more broadly, allowing appeals against any order determining taxable expenditure or tax payable under any provision of the Act. The court also referenced decisions under the Estate Duty Act, 1953, where similar wording allowed appeals against rectification orders. The Kerala High Court and the Gujarat High Court in subsequent decisions supported the broader interpretation of appeal rights under similar statutory provisions. Conclusion: The court concluded that the broader wording of section 21(1)(a) and (b) of the Expenditure-tax Act permits appeals against rectification orders made under section 31. This interpretation aligns with the legislative intent to provide a comprehensive right of appeal against orders affecting the determination of taxable expenditure and tax payable. Judgment: The court held that an appeal lies under section 21 of the Expenditure-tax Act, 1957, against an order of rectification passed under section 31. Consequently, the AAC and the Appellate Tribunal erred in their interpretation. The question was answered in the affirmative, in favor of the assessee, and parties were directed to bear their own costs of the reference.
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