2017 (12) TMI 880 - AT - Income Tax

CIT(A) s power u/s 251 to accept the claim of the assessee for amending the return except otherwise than by filing a revised return - CIT(A) allowed the claim of fringe benefit which was not claimed by the assessee in the return of income - Held that - Iin the present case under consideration, the assessee had already raised the claim before the AO in respect of expenditure incurred on uniform of employees on office duty but the AO rejected the claim of the assessee but the CIT(A) allowed the case of the assessee. We are of the view that judgment in the case of Goetze(India) Ltd. Vs. CIT (2006 (3) TMI 75 - SUPREME Court) clearly says that appellate authorities have the power to allow deduction or claim for expenditure of the assessee to which he was otherwise entitled, even though no claim was made by the assessee in the return of income and accordingly, he has made a claim before the ld. CIT(A) who has allowed the claim of the assessee. Therefore, considering factual position, we are of the view that the order passed by the ld. CIT(A) accepting the new claim which was not made by the assessee in his original or revised return of income, was not wrong on the part of the CIT(A) in entertaining the new claim of the assessee. Therefore, we hold that the order passed by the ld. CIT(A) does not have any infirmity. Interest under section 234D - whether assessing officer was right in charging interest on excess refund or not? - Held that - AO was right in charging the interest under section 234D of the Act. The explanation 2 of section 234D clarifies that section 234D(2) shall apply to an assessment year commencing before the 1st day of June, 2003 and we find the A.Y under consideration is commenced before 01.06.2003 and if the proceedings in respect of such assessment year is completed after the said date i.e. 29.03.2004, therefore, we hold that the ld. CIT(A) was not justified in allowing the ground raised by the assessee challenging the charging of interest, therefore, we quash the order passed by CIT(A). Hence, we confirm the order passed by AO U/s 234D of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Whether the CIT(A) has the power under section 251 of the Income Tax Act to accept a claim not made in the original or revised return of income.
2. Justification for deleting interest under section 234D of the Income Tax Act.

Analysis:

Issue 1:
The first appeal pertains to the claim made by the assessee regarding expenditure on uniforms of employees not considered for determining the value of fringe benefits. The AO rejected the claim as it was not included in the return of income. However, the CIT(A) allowed the claim, citing the judgment in Goetze(India) Ltd. case and the ITAT Kolkata judgment in the assessee's own case. The ITAT upheld the CIT(A)'s decision, stating that appellate authorities have the power to allow deductions even if not claimed in the return. The Revenue contended that the CIT(A) exceeded his powers under section 251. The ITAT held that the CIT(A) was justified in allowing the claim, as the assessee had raised it before the AO, and the ITAT Kolkata judgment supported the CIT(A)'s decision. Therefore, the appeal by the Revenue was dismissed.

Issue 2:
The second appeal concerns the interest charged under section 234D of the Income Tax Act. The AO charged interest following a judgment in the assessee's favor by the Calcutta High Court. The CIT(A) deleted the interest, stating that section 234D did not apply as the refund was received before the provision's introduction. The Revenue challenged this decision, citing Explanation 2 of section 234D. The ITAT noted that the assessment year commenced before June 1, 2003, and the proceedings were completed after that date. Therefore, the AO was correct in charging interest under section 234D. The ITAT allowed the Revenue's appeal and upheld the AO's order, quashing the CIT(A)'s decision.

In conclusion, the ITAT upheld the CIT(A)'s decision in the first appeal regarding the claim of fringe benefits and allowed the Revenue's appeal in the second case concerning interest under section 234D.