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TMI Blog1984 (6) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... 123), is bad in law. 4. The return file by the assessee on 31st Aug., 1976 cannot be termed as a return under s. 139(1) and on the other hand it is a return filed under s. 139(4) and, therefore, the learned CIT(A) erred in law as also on facts in holding that the return furnished on 31st Aug., 1976 was a return furnished within the extended time under s. 139(1). 5. It is against the facts on record to hold that on the date when the original return was filed i.e. on31st Aug., 1976, there was any extension of time granted for filing the said return and, therefore, the said return filed on31st Aug., 1976stood entered into the compartment of s. 139(4) of the Act. 6. The facts of the case and that of the assessee's letter dt.17th Feb., 1979have been totally misconstrued by the learned lower authorities. The totality of the facts/statements of the case did not conclusively proved either by inference or by material facts on record that the time for furnishing the return under s. 139(1) was originally extended by the ITO upto 30th Sept., 1976 and that the subsequent order of the ITO dt.21st Feb., 1979was merely a duplicate of the original order, as erroneously observed by the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) should have held that a sum of Rs. 2,34,817 had been spent inpurely temporary erections and, therefore, the rate of depreciation thereon should have been allowed @ 100 per cent as claimed. 17. Shri R.C. Kansal was removed from the Partnership on 31st March, 1975 without settlement of account on the relevant date and thereafter the firm derived the pecuniary benefit by using his share of the assets of the firm till the date of settlement. Therefore, the payment of Rs. 21,451 so made to Shri R.C. Kansal should not have been disallowed having regard to the provisions of sec. 37 of the Indian Partnership Act and sec. 88 of the Indian Trust Act. 18. It should have been held that the sum of Rs. 21,451 paid to Shri R.C. Kansal was of a revenue nature and should have been allowed as revenue expenditure having incurred for commercial expediency. 19. Since voluminous evidence having been filed by the assessee the CIT(A) should have himself dealt with the grounds relating to the addition on account of cash credits and arrived at a positive conclusion instead to restore the matter to the file of the ITO. 20. The learned CIT(A) should have adjudicated the grievance of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndore." 6. On the above facts the grievance of the assessee stood brushed aside by the ld. CIT(A),Indoreand the narration in the impugned order (vis-a-vis ground Nos. 2 and 3 taken by the assessee before us), reads as under: The objection of the appellant is that though the assessment proceedings have been validly transferred under s. 127 from ITO B Ward, Bhopal to the ITO (SIC) I, Indore there is no valid transfer of the pending reference under s. 144B (1) from IAC, Range X, Bhopal to the IAC (assessment) Indore. The learned counsel argued that the IAC (Asst.) Indore does not assume jurisdiction over the reference as a consequence of the order passed under s. 127 Unless the CIT passes a specific order under s. 123 (1) transferring the aforesaid reference from IAC, Bhopal to the IAC (Asst) Indore, the former continues to have jurisdiction over the reference. In other words, the disposal of the reference by IAC (Assessment)Indorewas without jurisdiction, This being so, the benefit of extended limitation was not available to the Department. In support of this view, the learned counsel cited the judgment of the Calcutta High Court in the case of ITO vs. Ashok Glass Works (1980) 125 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat be has observed is wholly misconceived and is against facts and law. The ld. authorised representative of the assessee strongly relied on the provisions of law as contained in s. 123, 127 and 144B of the Act and contended that there was inherent lack of jurisdiction on the part of the IAC Indore since he was not competent in law to have assumed jurisdiction under s. 144B of the Act and accordingly he could not have issued the directions on the basis of which the assessment has been framed The assessee in nut shell contends that since the assessment order is based on the directions of the IAC Indore and since the IAC Indore had not on facts and in law jurisdiction to give such direction there being total and inherent lack of jurisdiction the assessment is as a nullity Ratio of the decisions reported as Narinder Singh Dhingra vs. CIT (1973) 90 ITR 683 (1978) 113 ITR 22 (Guj) and that of the Tribunal special Bench Hyderabad, East Coast Marine Products (P) Ltd. vs. ITO (1983) 4 ITD 73 (Hyd) (SB) have been pressed in service along with Mulla s C.P.C. volume I, P. 157 and Concludingly strong reliance has been placed on the decision of the Hon ble Calcutta high Court in ITO Ors vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the case is so transferred shall have concurrent jurisdiction over such case and shall perform their junctions in accordance with such general or special orders in writing as the Board or the Commissioner may make for the purpose of facilitating the performance of such functions, and the ITO shall perform their functions also in accordance with such orders or directions as the IAC may make under sub-s. (2) of s. 124 or, as the case may be, under sub-s.(2) of s. 125A. (2). The transfer of a case under sub-s. (1) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the ITO or ITO's from whom the case is transferred. Explanation: In this section and in s. 121,123, 124 and 125, the word "case", in relation to any person whose name is specified in any order or direction issued three under, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." 8. A reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h he has made a return under sub-s.(1) of s. 139 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-s. (2) of s. 139 or under s. 148 for the making of the return. (6) Subject to the provisions of sub-s. (5), where an assessee calls in question the jurisdiction of an ITO, then the ITO shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-s. (4) before assessment is made. (7) Notwithstanding anything contained in this section (or in s. 130A) every ITO shall have all the powers conferred by or under this Act on an ITO in respect of any income accruing or arising or arising or received within the area for which he is appointed." 10. The above section speaks of the jurisdiction of the ITO in performing their functions in respect of such areas or of such persons or classes or persons or of such incomes or classes of income or of such cases or classes of cases as the Commissioner may direct. 11. Sec. 123 of the Act deals with jurisdiction of IAC and the said provisions read as under: "Jurisdiction of IAC's. Sec. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see stood validly transferred from ITO B-Ward, Bhopal to ITO Special Investigation Circle-I, Indore, but that does not suo moto give the jurisdiction to IAC Indore. This is what the ld. authors Chaturvedi and Pithisaria have to say in their Commentary on IT Law (Third Edition) Volume 3 p. 2546; on the issue involved in these grounds of the assessee: "Transfer order under s. 127(1), ordinarily affects ITO's jurisdiction. Strictly speaking, s. 127(1) affects the jurisdiction of the ITO and an order thereunder by itself cannot affect the jurisdiction of the IAC in respect of proceedings pending before him. This is so because the jurisdiction of an IAC can only be affected by an order under s. 123(1) (ITO vs. Ashoke Glass Works (1980) 125 ITR 491 (Cal). It may be remembered that the above principle is restricted to proceedings already pending before him and not in respect of any future proceedings. Such future proceedings have to be referred by the transferee ITO s to his own IAC. Commissioner's order under s. 127(1) and that under s. 124(1) Fields of operation. If the case of a particular assessee is transferred under s. 127(1) by the Commissioner from one ITO to another, the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be so and amounts to a nullity. We hold and direct accordingly with the result, that the orders of the lower authorities stand cancelled. The grounds by the assessee succeed and stand allowed. 17. As regards ground Nos. 4 to 11 taken by the assessee before us, the chart placed by the assessee as p. 2 of its paper-book gives the following facts: (i) Date on which return was due to be filed. 31-7-1976 (ii) Date on which return was actually filed. 31-8-1976 (iii) Revised return filed, 2-3-1979 (iv) Statutory form No. 6 prayer for extension upto30th Sept., 1976filed on 31-7-1976 (v) Time extended upto30th Sept., 1976vide orders dt. February, 1979. 18. The whole case of the assessee is that since there has been no valid and formal rather speaking orders of extension granted by the ITO, return filed by the assessee on 31st Aug., 1976 has to be taken as a return filed under s. 139(4) of the Act, hence the revised return said to have been filed on 2nd March, 1979 cannot be in law taken to be a revised return in as much as the return filed on 31st Aug., 1976 was not a return filed under s. 139(1) or 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BHEL. The ld. authorised representatives were categorical that this issue is covered in favour of the assessee by the earlier order of the ITAT hence the ground stands allowed. The total expenditure on temporary erection which is in the nature of a pure temporary one is held to be allowable as a revenue expenditure or also we can say that as an alternative 100 per cent depreciation is to be allowed to the assessee on this head of expenditure. 22. Grounds No. 17 and 18 deal with the payment of Rs. 21,451. Shri R.C. Kansal was an erstwhile partner of the assessee firm. The payment is made to him for business expediency. We hold accordingly. In fact affidavit of Shri R.C. Kansan when read along with his letter dt.16th July, 1975addressed to BHEL and agreement dt.16th July, 1975between the assessee and the said Shri Kansal proves the assessee's case. The assessee has been delaying the settlement of accounts of the said Shri Kansal although there is said to be a parting of ways between the said Shri Kansal and the continuing partners of the assessee firm as on31st March, 1975. His dues were not given in time rather used by the assessee firm for its business and on these facts the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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