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TMI Blog1992 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... were also issued to the assessee. The assessee opposed the reopening of the original assessments and contended that the reopening was not valid since there was no fresh information before the ITO so as to attract the provisions of s. 147(b) of the IT Act. Rejecting this contention, the ITO reopened the assessments and withdrew the grant of provision for purchase tax liability. On appeal, the CIT(A) upheld the orders passed by the ITO under s. 147(b). Hence, these further appeals by the assessee. 3. The question that arises before us is whether the original assessments were validly reopened under s. 147(b) of the IT Act. Admittedly, the original assessments were reopened only on the basis of the audit objection. The assessee contended that there was no fresh information in this case and the objection of the audit party will not constitute 'an information' to reopen the assessments under s. 147(b) of the IT Act. The learned representative for the assessee also placed reliance on the decision of the Supreme Court in the case of Indian and Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC), wherein the Supreme Court held that the opinion of the audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Indian and Eastern Newspaper Society vs. CIT, wherein the Hon'ble Supreme Court has held as follows: "In every case, a declaration or exposition to be law must be a creation by a formal source, either legislature or judicial authority. A statement by a person or body not competent to create or define the law cannot be regarded as law. The suggested interpretation of enacted legislation and the elaboration of legal principles in text books and journals do not enjoy the status of law. They are merely opinions and, at best, evidence in regard to the state of law and in themselves possess no binding effect as law. The forensic submissions of professional lawyers and the seminal activities of legal academics enjoy no higher status." Further, it was held that the opinion of the audit party on a point of law could not be regarded as 'information' enabling the ITO to initiate reassessment proceedings under s. 147(b). 5. The audit party has pronounced its opinion on a question of law based on incorrect appreciation of facts when it stated that "actually the assessee has got no legal liability for the payment of purchase tax on produce exported especially in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on the business of purchasing tea of different qualities, blending the same by mixing one type with another and selling it, claimed that it was an industrial company, within the meaning of s. 2(7)(c) of the Finance Act, 1978, entitled to concessional rate of tax. The Tribunal disallowed the claim on the ground that there is no processing of tea as the end product was the same and the process was manual. On a reference the Hon'ble Calcutta High Court held that the Tribunal was in error and the assessee was an 'industrial company' in terms of s. 2(7)(c) of the Finance Act, 1978. The Hon'ble High Court followed the ratio laid down in the case of Chowgule Co. Pvt. Ltd. Anr. vs. Union of India Ors. 47 STC 124 (SC). The above decisions are applicable to the facts of this case and we hold that the assessee is an industrial company and is entitled to concessional rate of tax. We also find that in the assessee's own case, the CIT(A) vide his order dated 18th Oct., 1989, for the assessment year 1980-81 had held that the assessee is entilted to be treated as an industrial company for the purpose of levy of tax. Therefore, this issue is decided in favour of the assessee. 8. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the payment under s. 35B(i)(b)(iv) of the IT Act, 1961." The Hon'ble High Court came to the conclusion that 'For being entitled to weighted deduction, the foreign agency need not work as a servant exclusively for the assessee'. Respectfully following the above decision of the jurisdictional High Court, we hold that the assessee is entitled to get deduction in respect of commission paid to foreign agents. This ground is decided in favour of the assessee. 9. The next ground which is common to appeal Nos. 458 and 459(Coch)/87 is against the disallowance made under s. 40A(5) of the IT Act, for the asst. yrs. 1981-82 and 1982-83. While completing the assessments for the above two years, the ITO disallowed a sum of Rs. 26,636 and Rs. 18,141 in the asst. yrs. 1981-82 and 1982-83 respectively by involving the provisions of s. 40A(5) of the IT Act out of the remuneration of the wholetime directors. On appeal, the CIT(A) directed the ITO to recalculate the disallowance following the decision of the Tribunal dt. 30th Nov., 1981 based on the decision of the Kerala High Court in the case of Forbes, Dwart Figgis (P) Ltd. 10. We have heard the parties to the dispute. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for sustaining an addition of Rs. 24,728 under the head `pepper-vaida'. During the course of assessment proceedings, the ITO noticed that a sum of Rs. 24,728 was debited as 'pepper vaida'. The ITO was of the view that this was the net loss suffered by the assessee in pepper forward trade. Hence, he requested the assessee to file a 'note' on the expenditure under 'pepper vaida'. It was also suggested to the assessee that the expenditure is in the nature of speculation loss and, therefore, calls for disallowance. The assessee did not file any reply. Hence, the ITO disallowed the claim treating the same as speculation loss. However, the ITO allowed this loss to be carried forward to be set off against any future income under speculation. The CIT(A) also found as a matter of fact, that this is clearly in the nature of speculation loss. On a careful consideration of the facts and circumstances of the case, we also agree with the view of the CIT(A). This ground taken by the assessee is dismissed. 14. The next issue which requires our consideration in the appeal for the year 1982-83 is in respect of addition made under s. 40A(8). The ITO disallowed a sum of Rs. 410 under the head 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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