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2018 (9) TMI 1553 - AT - Income TaxRectification of mistake - Restricting the deduction u/s 80HHC by applying section 80AB - Held that - Non-adjudication of the issues raised before the appellate authority in itself is a mistake apparent from record, which deserves rectification u/s 154/155 of the Act. The action of the Assessing Officer in restricting the deduction u/s 80HHC by applying section 80AB of the Act for excluding the dividend income from business income is erroneous in law. As carefully perused the order of the first appellate authority dated 26.04.2001. We find force in the contention of the assessee. The issues mentioned hereinabove have not been addressed by the first appellate authority while adjudicating Ground No. 1 of the appeal. It is settled position of law that non-adjudication of issues is a mistake apparent from record and the first appellate authority ought to have considered the rectification application in true spirit and decided the issue afresh - remit the matter to the file of the CIT(A) with the direction to decide all the issues afresh after giving reasonable and sufficient opportunity of being heard to the assessee.
Issues Involved:
1. Appeal against order of CIT(A) regarding deduction u/s 80HHC for A.Y 1997-98. Analysis: The appeal before the Appellate Tribunal ITAT Delhi was filed by the assessee against the order of the CIT(A) pertaining to the assessment year 1997-98. The grievances raised by the assessee primarily revolved around the denial of deduction u/s 80HHC of the Income-tax Act. The assessee contended that the CIT(A) erred in not adjudicating the issue of restricting the deduction to a much lower amount than claimed, as well as in not considering the applicability of section 80AB of the Act. The assessee also challenged the reliance on certain court decisions by the CIT(A) and raised concerns about the treatment of indirect costs and prior period expenditure for computing the deduction u/s 80HHC. The facts of the case revealed that the assessee, a Government of India Enterprise, was involved in trading and manufacturing commodities for both export and domestic markets. The Assessing Officer had previously framed an assessment under section 143(3) of the Act, which was contested before the CIT(A). Subsequently, the assessee sought rectification of the appellate order under section 154 of the Act, claiming that certain issues were not considered by the CIT(A). During the proceedings, the counsel for the assessee argued that the non-adjudication of raised issues before the appellate authority constituted a mistake apparent from the record, warranting rectification under sections 154/155 of the Act. The Departmental Representative (DR) supported the findings of the CIT(A). Upon careful consideration, the Tribunal observed that the issues raised by the assessee before the CIT(A) were crucial and required proper adjudication. It was noted that the CIT(A) had failed to address key issues related to the calculation of indirect costs, treatment of prior period expenditure, and the applicability of section 80AB in relation to section 80HHC. The Tribunal concluded that the action of the Assessing Officer in restricting the deduction u/s 80HHC based on section 80AB was legally flawed. Consequently, the Tribunal remitted the matter back to the CIT(A) with directions to reconsider and decide all the issues afresh, ensuring the assessee is given a fair opportunity to present their case. The appeal of the assessee was treated as allowed for statistical purposes. The judgment was delivered on 20.09.2018 by the Appellate Tribunal ITAT Delhi.
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