1990 (1) TMI 113 - AT - Income Tax

Summary

Issues:
1. Whether the Tribunal was legally right in permitting the assessee to set up a new case in the second appellate stage, contrary to the case set up earlier?
2. Whether the Tribunal was legally right in admitting fresh evidence at this stage?
3. Whether the Tribunal was justified in calling for evidence not before lower authorities using Rule 29 of Income-tax Appellate Tribunal Rules?

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi-A involved a reference application by the Commissioner of Income-tax, Delhi-III, New Delhi, regarding questions of law arising from a remand order in ITA No. 1795/Del/88. The Tribunal declined to refer the questions to the High Court, stating that no question of law arises from an interlocutory order. The case involved an assessee, a private limited company manufacturing soft drink concentrates, disputing the disallowance of advertisement expenditure incurred by itself and sister companies. The Tribunal had previously remanded the matter to the ITO for fresh examination, directing verification of facts regarding the expenditure. The IAC's subsequent assessment deviated from the Tribunal's directions, leading to an appeal before the Tribunal for the second time.

The Tribunal found it necessary to remand the case to ascertain the truth, rejecting the notion that it allowed the assessee to set up a new case. The Tribunal directed verification of agreements and documents to determine the genuineness of the expenditure incurred. Despite objections to admitting fresh evidence, the Tribunal decided to ensure proper verification before making a decision. The Tribunal emphasized the importance of verifying facts for justice and rectifying earlier mistakes. It clarified that the remand order was interlocutory and not a final disposal of the appeal, citing legal precedents that a reference can only lie from a final order, not an interlocutory one.

The judgment highlighted the settled legal position that no question of law can arise from an interlocutory order, as confirmed by the Supreme Court. Refusal to state a case on a misconceived application due to no question of law arising does not authorize the High Court to direct the Tribunal to state a case. Consequently, the reference application was dismissed as not maintainable, in line with established legal principles.