1986 (9) TMI 125 - AT - Income Tax

Issues Involved:
1. Investment allowance claim of Rs. 3,42,481.
2. Agricultural development allowance claim.
3. Maintainability of the appeal.
4. Jurisdiction of the Commissioner (Appeals) to entertain new claims in reopened assessment.

Detailed Analysis:

1. Investment Allowance Claim of Rs. 3,42,481
The primary business of the assessee-company involves the manufacture and sale of one-day-old chicks. The assessee claimed investment allowance under section 32A of the Income-tax Act, 1961, which was initially denied by the ITO based on prior assessment orders. The Commissioner (Appeals) had previously allowed the claim following the Tribunal's decision in Sri Venkateswara Hatcheries (P.) Ltd.'s case, equating eggs with seeds and considering the hatching process as producing 'articles or things'. The ITO, in a subsequent order, computed the investment allowance at Rs. 4,08,842 based on the value of plant and machinery. However, in a reassessment dated 24-10-1983, the ITO overlooked this allowance, leading to the appeal.

2. Agricultural Development Allowance Claim
The assessee also claimed agricultural development allowance under section 35C of the Act, which was not initially put forward during the original assessment. This claim was made for the first time before the Commissioner (Appeals) during the reopened assessment proceedings. The Commissioner (Appeals) dismissed this claim on merits without considering its admissibility in reopened proceedings.

3. Maintainability of the Appeal
The departmental representative raised a preliminary objection to the maintainability of the appeal, arguing that reassessment under section 147(a) is intended to bring to tax any escaped income and not to confer new benefits to the assessee. The representative cited rulings from the Kerala and Bombay High Courts, emphasizing that reassessment does not open the entire assessment and is not meant for the benefit of the assessee.

4. Jurisdiction of the Commissioner (Appeals) to Entertain New Claims in Reopened Assessment
The Commissioner (Appeals) entertained new claims for investment allowance on parent stock and agricultural development allowance without addressing the jurisdictional issue. The departmental representative contended that fresh claims should not be entertained in reopened proceedings and cited rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, to support this stance. The Tribunal noted that the Commissioner (Appeals) failed to provide reasons for assuming jurisdiction over these new claims.

Conclusion:
The Tribunal set aside the order of the Commissioner (Appeals) and remanded the matter back for reconsideration. The Commissioner (Appeals) was directed to address the jurisdictional issues and the merits of the new claims. The appeal filed by the assessee was deemed allowed for statistical purposes, pending further examination by the Commissioner (Appeals).

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