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Issues Involved:
1. Whether the Tribunal was right in law in directing the Appellate Assistant Commissioner to consider the claim of the assessee under section 80J, which was not made either before the Income-tax Officer or before the Appellate Assistant Commissioner. Issue-wise Detailed Analysis: 1. Tribunal's Direction to Consider Claim Under Section 80J: The core issue in this case is whether the Tribunal was justified in directing the Appellate Assistant Commissioner (AAC) to consider the assessee's claim under section 80J, despite the claim not being made before the Income-tax Officer (ITO) or the AAC. The Tribunal allowed the assessee to raise this point, considering it a legal matter, and directed the AAC to pass orders after giving an opportunity to both the ITO and the assessee to present their cases. The Tribunal's decision was based on the premise that the assessee had not raised the point before the AAC, but it was a legal matter that could be entertained even if raised for the first time before the Tribunal. The High Court emphasized the importance of determining whether the point regarding section 80J was indeed raised before the AAC. The Tribunal should first ascertain if the contention was orally urged before the AAC. If it was, then the Tribunal had the jurisdiction to deal with the question and could remand the matter back to the ITO or AAC to ascertain the facts regarding the claim for relief under section 80J. However, if the contention was not raised before the AAC, the grievance that the AAC did not consider the contention could not form the subject matter of the appeal before the Tribunal, and the Tribunal could not allow the assessee to raise the plea for the first time before it. Jurisdiction and Powers of the Tribunal: The High Court discussed the jurisdiction and powers of the Tribunal, referencing several Supreme Court decisions. The Tribunal's jurisdiction is restricted to the subject matter of the appeal, which includes the decisions (express or implied) of the AAC. The Tribunal has wide powers to deal with all questions of fact and law pertaining to the subject matter of the appeal, including allowing new legal arguments based on the same facts. However, the Tribunal cannot transgress the limits of its jurisdiction, which is confined to the subject matter of the appeal. Relevant Case Law: The High Court referenced several key decisions to elucidate the Tribunal's jurisdiction and powers: - Hukumchand Mills Ltd. v. Commissioner of Income-tax [1967] 63 ITR 232 (SC): The Supreme Court held that the Tribunal's jurisdiction is restricted to the subject matter of the appeal, but within that jurisdiction, the Tribunal has wide powers to pass orders as it thinks fit, including directing further inquiries by the ITO or AAC. - Commissioner of Income-tax v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC): The Supreme Court emphasized that the Tribunal can grant relief on a different ground if it relates to the same subject matter of the appeal, even if the ground was not raised before the departmental authorities. - Commissioner of Income-tax v. Karamchand Premchand P. Ltd. [1969] 74 ITR 254 (Guj): The Gujarat High Court held that the Tribunal cannot deal with a matter not forming the subject matter of the appeal before it. The subject matter of the appeal is determined by the decisions (express or implied) of the AAC. - Commissioner of Income-tax v. Sayaji Mills Ltd. [1974] 94 ITR 26 (Guj): The High Court reiterated that the Tribunal's jurisdiction is restricted to the subject matter of the appeal, but within that jurisdiction, it has wide powers to pass orders. Conclusion: The High Court declined to answer the referred question, emphasizing that the Tribunal must first determine whether the point regarding section 80J was urged before the AAC. If it was, the Tribunal has the jurisdiction to deal with the question and can remand the matter for further inquiry. If not, the Tribunal cannot allow the assessee to raise the plea for the first time before it. The Tribunal must adjust its decision in light of these observations.
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