1988 (9) TMI 107 - AT - Income Tax

Summary

Issues:
1. Claim of deduction u/s. 35B in reassessment proceedings.
2. Eligibility of expenditure for deduction u/s. 35B.
3. Entitlement to claim deduction not made in original assessment.
4. Interpretation of provisions regarding reassessment proceedings.

Detailed Analysis:
1. The judgment pertains to the claim of deduction u/s. 35B of the Income-tax Act, 1961 in reassessment proceedings. The original assessment was made for the assessment year 1974-75, and later, a reassessment was conducted adding certain amounts to the total income. The assessee appealed to contest these additions and also claimed entitlement to deduction under sec. 35B for specific expenditures. The CIT (Appeals) allowed relief on certain expenditures but the assessee sought full deduction under sec. 35B in the subsequent appeal.

2. The issue of eligibility of expenditure for deduction u/s. 35B was extensively discussed. The assessee claimed various expenses totaling Rs. 7,69,570, out of which the CIT (Appeals) considered Rs. 1,85,702 as eligible. The remaining balance was contested by the assessee, providing a detailed breakdown of the expenditure. The Tribunal analyzed each item and concluded that most expenses related to export market development were eligible for deduction under sec. 35B, except for a few specific items.

3. The judgment delved into the question of whether the assessee was entitled to claim a deduction not made in the original assessment proceedings. The Revenue objected to the claim, citing precedents that rejected claims not raised during the original assessment. The Tribunal considered various decisions and observed that the assessee failed to make the claim in the original assessment, reassessment, and initial appeal stages. The Tribunal highlighted the importance of timely claim submission and observed that the claim could not be entertained due to the assessee's inaction.

4. Lastly, the judgment examined the interpretation of provisions governing reassessment proceedings. The Tribunal emphasized that the reassessment process allows for a fresh assessment of the total income, but the claim for deduction must be raised within the prescribed timelines. The Tribunal noted that the assessee did not follow the procedure to drop the reassessment proceedings by showing the correct tax liability, which could have affected the consideration of the deduction claim. Ultimately, the Tribunal upheld the Revenue's objection, denying the assessee's claim for deduction u/s. 35B in the reassessment proceedings.