1994 (12) TMI 114 - AT - Income Tax

Appellate Authority Assessing Officer Business Income Income From Business Power To Admit Additional Ground Previous Year Property Tax Tribunal s Order

Summary

Issues Involved:
1. Disallowance of Rs. 60,174 under Section 43B of the Income-tax Act, 1961.
2. Applicability of Section 43B to property income.
3. Additional ground raised by the revenue regarding computation of property income.

Issue-wise Detailed Analysis:

1. Disallowance of Rs. 60,174 under Section 43B of the Income-tax Act, 1961:
The Tribunal initially sustained the disallowance of Rs. 60,174 as building tax under Section 43B. The assessee filed a Miscellaneous Petition, arguing that the CIT (Appeals) had deleted the disallowance, holding that it did not fall under Section 43B as it related to property income computation. The Tribunal recalled its order upon realizing that the revenue did not appeal against the property income computation. The assessee provided evidence of property tax payment, and it was agreed that the reference to building tax was incorrect. The Tribunal concluded that property tax is a valid deduction for computing property income, and Section 43B is relevant only for business or profession income under Section 28 onwards. The Tribunal modified its order, deleting the disallowance of Rs. 60,174.

2. Applicability of Section 43B to Property Income:
The Tribunal examined Section 43B, which overrides other Income-tax Act provisions but is ultimately applicable only to income computation under Section 28. The Tribunal cited the section's text, emphasizing its relevance to business or profession income computation. The Explanation in Section 43B further clarified its application to Section 28 income. The Tribunal concluded that Section 43B does not extend to property income under Section 22. The Assessing Officer's disallowance of Rs. 60,174 as building tax was incorrect, as it referred to property tax. The Tribunal upheld the CIT (Appeals)'s deletion of the disallowance.

3. Additional Ground Raised by the Revenue Regarding Computation of Property Income:
The revenue raised an additional ground, arguing that the CIT (Appeals) erred in deleting the disallowance under Section 43B without considering that Rs. 60,174 had already been deducted in computing property income. The Tribunal heard rival submissions. The assessee contended that the additional ground did not arise from the CIT (Appeals)'s order or the Tribunal's subject-matter. The Tribunal noted that the appeal before the CIT (Appeals) and the Tribunal concerned business income computation under Section 28. The Tribunal cited Supreme Court and High Court decisions, emphasizing that new issues not raised before lower authorities could be raised in appeal if they related to the subject-matter. The Tribunal concluded that the revenue could not raise new issues regarding property income computation in an appeal concerning business income. The Tribunal dismissed the additional ground, stating it altered the dispute's complexion.

Conclusion:
The Tribunal dismissed the revenue's appeal, confirming that Section 43B does not apply to property income and upholding the CIT (Appeals)'s deletion of the Rs. 60,174 disallowance. The Tribunal refrained from giving directions on the municipal tax issue, leaving it to the Assessing Officer to address any under-assessment in accordance with the law.