9911796707
TMI Blog1983 (6) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's application and also having heard the arguments of both the sides, we condone the delay. As already mentioned, the grounds taken in the appeal are identical with the grounds taken in the cross-objection and, therefore, it makes no difference even if we condone the delay and hear the appeal along with the cross-objection. 2. At the outset, the learned standing counsel, Shri Wazir Singh, argued that, we have no jurisdiction to hear the appeals as the President had no power to transfer these appeals from Nagpur Bench to Delhi Bench. He pointed out that by general order, namely, Standing Order No. 1 of 1973, the jurisdiction of the different Benches of the Tribunal has been set out in accordance with the power given to the President under rule 4 of the Income-tax (Appellate Tribunal) Rules, 1963 and, therefore, that power is exhausted. Secondly, for transferring an appeal from one Bench to another, the President should have followed the principles of natural justice and the transfer is discriminatory because it causes inconvenience and hardship to the Commissioner. He relied on the decision of thePunjaband Haryana High Court in 18 STC 50 (sic). He has also referred to the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue and in that order the present appeals are included. There is also no merit in the contention of the learned standing counsel that the order of transfer is not valid or that it is without jurisdiction. The procedure followed in the case of an application filed by an assessee for transfer of a case from one Bench to another is that the matter is first of all placed before the Bench concerned for its comments. Then the matter is sent to the President or the Vice President, as the case may be, for passing appropriate orders (The President has delegated the power to the Vice Presidents for transferring of a case from one Bench to another within his zone and the President passes an order for an inter-zone transfer). Thereafter the application for transfer is sent to the opposite party for his objections. After getting the reply, the President or the Vice President, as the case may be, after giving due consideration to all aspects either passes an order of transfer or rejects the application for transfer. In this case also the same procedure has been followed. The assessee's application was sent to the Commissioner. In fact, the assessee filed an application for transfer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) while dealing with the assessee's claim under section 35B, on merits on his own, raised a query as to how the assessee would be entitled to relief under section 35B as the assessee was not the real exporter and that Metals and Minerals Trading Corporation ('MMTC') as a Government undertaking is to channelise exports as well as to effect some exports on its own. The assessee was heard on this matter and the Commissioner (Appeals) following the decision of the Madras High Court in CIT v. Kasturi Palayacat Co. [1979] 120 ITR 827 as well as the decision of the Supreme Court in Mod. Serajuddin v. State ofOrissa[1975] 36 STC 136 held that the assessee is not an exporter. Accordingly, he held that the assessee would not be entitled to any relief under section 35B. He, therefore, directed the ITO to withdraw the relief already allowed by him and also rejected the assessee's claim for further relief. It is this portion of the order of the Commissioner (Appeals) that is now attacked by the assessee in its appeal as well as in its cross-objection. 32. Shri Salve for the assessee contended that the view taken by the Commissioner (Appeals) is erroneous as the principles whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such goods that the assessee has incurred the expenditure and its claim is that it comes under various clauses of section 35B. Thus, the whole exercise of considering the decisions either in the case of Mod. Serajuddin or in the assessee's own case decided by the Delhi High Court will be fruitless. The requirements of Article 286(1) of the Constitution of India or those of section 280ZC are totally different and they have no relevance whatsoever in deciding an issue arising under section 35B. It is in respect of the assessee's goods that the assessee incurred certain expenditure with respect to which it claims weighted deduction under section 35B. If the assessee fulfils the other requirements of the provision, it would be certainly entitled to the claim and it cannot be refused on the objection raised by Mr. Wazir Singh. In our opinion, by a bare perusal of section 35B, the objection raised by the revenue is untenable. 36. The additional ground also should have been admitted by the Commissioner (Appeals) having regard to his own observations in paragraph 62. All the particulars have been furnished by the assessee even at the assessment stage and it was only by inadvertence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents is the Tribunal as respondent No. 7. Prayers (a) and (b) read as follows : (a) to stay the operation of and/or restrain the respondent from taking any steps and/or giving effect to the provisions of section 17 of the Finance (No. 2) Act, 1980, insofar as the same purports to amend section 80J of the Income-tax Act with retrospective effect from 1st April, 1972 ; (b) to restrain respondent No. 7 while deciding appeals for the assessment years 1972-73, 1973-74, 1974-75, 1976-77 and 1977-78 as well as respondent No. 6 while deciding appeals for the assessment year 1975-76 from acting in pursuant to or from giving effect to the provisions of section 17 of the Finance (No. 2) Act, 1980, insofar as the same purports to amend section 80J of the Income-tax Act with effect from 1st April, 1972, and from completing the said appeal and/or the assessment proceedings on any basis other than by taking into account borrowed capital in computing the 'capital employed' for the purpose of section 80J of the Act and restraining the 1st respondent and 2nd respondent from re-opening, rectifying or revising any of the completed assessment for the base years for the purposes of giving effect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how by the assessee regarding the plant and process of manufacture. Clause 1 of the agreement provides for EI to give technical know-how from Wargon which includes ideas, knowledge and experience not only regarding the plant and equipment but also the operation of the metallurgical processes to produce low-carbon ferro chrome. Clause 1.2 deals with the supply of designs, etc., for the plant and machinery while clause 1.3 deals with the providing of technical know-how by the EI. Clause 1.4 reads as follows : " The know-how supplied by EI shall remain his exclusive property and shall not be available to any third party in any way whatsoever without the written consent of EI. " This shows that the technical know-how will remain with EI and is not transferred to the assessee permanently. Clause 1.9 deals with continuous supply of technical know-how during the currency of the agreement which is for 10 years. Clause 2 by and large deals with training and service of experts. Clause 3.2 deals with payment of royalty in respect of technical know-how relating to the supply of information regarding manufacture, etc. Clause 3.1 deals with the payment of lumpsum consideration for the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Practice on Income-tax quoted by it in its order does not support the view taken by it and on the other hand, it supports the stand of the revenue. According to Shri Wazir Singh, the revenue cannot take a point which affects adversely to an assessee without filing a cross-objection but in this case the revenue has come up in appeal specifically. He further pointed out that the Commissioner (Appeals) went into the question of allowability of royalty payment and specifically gave a finding that it is to be allowed and, therefore, this finding of the Commissioner (Appeals) is open to challenge by the revenue in the appeal filed by it. He referred to the provisions of section 253(2) of the Act which says that the Commissioner is entitled to file an appeal before the Tribunal if he objects to any order passed by the first appellate authority and since in this case, an order regarding a finding that the royalty payment should be allowed has been passed, the same can be the subject-matter of appeal. 40. Mr. Salve, in reply, pointed out section 251 of the Act which provides for the powers of the first appellate authority and pointed out that the first appellate authority may confirm, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be filed against one's own order. 42. In this background one has to see the provisions of section 251 which gives powers to the first appellate authority while dealing with an appeal filed at the instance of the assessee. The assessee, no doubt, has a right to file an appeal under section 246 of the Act and the powers to be exercised by the first appellate authority are contained in section 251. The first appellate authority, it is well-settled has vast powers and those powers are co-extensive with those of the ITO. It has not only got the power to reduce, cancel or annul an assessment or set aside an assessment but also it has got specific power of enhancement of the assessment. This power of enhancement is again circumscribed by certain limitations as pointed out by the judicial decisions. It is unnecessary to refer to those decisions as they are well known and well settled. But it is clear from the provisions of section 251 that the ITO is not given any power to make an application to the first appellate authority with a prayer to enhance the assessment or to take into account a matter which has not been considered by him in his assessment. Generally, as already stated, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on the application. It may be that in the exercise of his powers which are vested under the statute, the authority may take notice of what has been brought to his knowledge. The ITO, therefore, cannot make an application in law seeking for an enhancement in the assessment and there is no question of the first appellate authority passing an order refusing to enhance. If he enhances the assessment, then that will be the subject-matter of appeal at the instance of the assessee before the Tribunal but if he does not like to enhance or he is not satisfied that the case requires an enhancement, there is an end of the matter. There is no question of passing an order refusing to make the enhancement. When the first appellate authority is satisfied that the particular disallowance has been rightly allowed by the ITO then he has to keep quiet. No positive order is contemplated by him to be passed. When such is the position there is no question of an appeal being filed against that order. 43. If an ITO is allowed to apply for enhancement and if the first appellate authority does not agree with the ITO, the result is that the order of the ITO is found to be correct. The first appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tribunal. 45. It may be mentioned, as rightly pointed out by Mr. Salve, that if the Commissioner (Appeals) refused to make an enhancement in spite of the fact that the matter has been brought to his knowledge, all that the ITO perhaps can do is to seek judicial review. It is well settled that if authority vested with a duty to act but fails to act, the Court under article 226 can compel that authority to act in accordance with law. In other words failure to act or inaction as it may be called can be corrected by the judicial review at the instance of the aggrieved party. However, that does not give rise to any right to the ITO to file an appeal before the Tribunal when the law does not provide for it. Thus, we are clearly of the view that the ground raised by the revenue is not maintainable before us. The finding and all the observations made by the Commissioner (Appeals) are not binding on any of the parties and they are treated as superfluous. In this view of the matter, it is neither proper nor desirable to decide the question on merits. It is needless to mention that there are many other remedies provided by the law to the revenue. 46. to 48. [These paras are not rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
