9911796707
TMI Blog1984 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... follows. 5. The assessee bought imported goods from Hindustan Steel Ltd. (HSL) at prices fixed from time to time by the Joint Plant Committee (JPC). A notification was issued on15-10-1973(Announcement No. 116 of JPC) raising the price of steel goods including imported goods sold by HSL with effect from15-10-1973. It was explained before us that imported steel was sold through HSL to registered exporters under a scheme announced by public notice on18-6-1972(Notice No. 56) by the Central Government. As noted above, the supply price of the imported steel was also increased under the said notification of15-10-1973. The Export Engineering Promotion Council consisting of the members of the trade affected by the said increase represented to the authorities concerned against the increase. The matter was still under discussion with the authorities when the assessee's relevant previous year here ended on31-3-1974. 6. In the meantime, there was a second JPC notification, effective from1-8-1974(No. 137). This date fell in the next accounting year of the assessee being relevant for the assessment year 1975-76. All the invoices received by the assessee from15-10-1973to31-3-1974from HSL were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our years. (e) The above position would clearly show that the deduction claimed by the assessee did not represent a settled liability. It was a ' liability ' that was not enforced even after four years, due to reasons known to the assessee only. Perhaps, the whole matter had been in dispute either on a representation from the assessee or from the industry concerned. In appeal, the Commissioner (Appeals) allowed the assessee's claim and, hence, the revenue is aggrieved. 8. Shri Dave relied on the above reasoning of the ITO. In his view, so far as the accounting year before us was concerned, there was neither a statutory nor a contractual liability that came to lie on the assessee with regard to the above alleged increase in the price of steel consumed and, hence, the claim was rightly disallowed. 9. Shri G.C. Sharma, the learned counsel for the assessee, emphasized that when JPC increased the prices with effect from15-10-1973, the assessee's method of accounting being mercantile, a liability stood foisted on the assessee. The subsequent remission cannot wash away the liability which did come into existence during the accounting year. The counsel referred us to page 17 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned a statutory liability. It should, however, equally apply to any other specific and ascertainable trade liability. (c) When did the liability accrue ? This was the crucial point. The assessee's relation with HSL was that of a buyer vis-a-vis seller. It was a contractual relationship arising in the course of business. HSL acted as an agent of JPC, in enforcing the decision of JPC. This decision itself was based on the Government policy and announcements. Resistance to such increase in JPC prices by the assessee could result either in the cancellation of the contract or delisting from the list of buyers or for civil proceedings for recovery. The buyer had no option but to submit to the price increase and could refuse only at the peril of forfeiting supplies. This might result in closure of business. (d) It was certainly not a contingent liability as taken by the ITO. The assessee no doubt did not provide for such a liability in its accounts for this year. However, it provided for it in its accounts for the assessment year 1975-76, but claimed it in the return for the assessment year 1974-75. Ultimately, of course, the liability did not materialise. Even after the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 to 1972-73 upheld the assessee's claim for deduction of such selling agency commission as allowable business expenditure. The ITO was not inclined to accept the Tribunal's decision as reference proceedings had been taken out for these years. He looked into the details of the claim for this year and disallowed it. The disallowance is based on the following reasons briefly : (a) Raunaq was approved as sole selling agents by the Government for the period7-11-1970to6-11-1975. This was by the Government's letter dated 24-7-1975 (this letter was issued by the Deputy Secretary to the Company Law Board, Department of Company Affairs, Ministry of Law, Justice and Company Affairs). In paragraph No. 2 of the said letter, it was clearly stated that the sole selling agents shall not receive any remuneration on sales made directly by the assessee including sales to the Government and corporations or bodies controlled by the Government. (b) In the subsequent letter of24-12-1976of the same Ministry, this condition was relaxed in respect of direct sales only for the period of24-7-1975to6-11-1975provided such sales were attributable to the efforts of the sole selling agents. The assessee, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been pleased to decide in partial modification of para 2 of this Board's letter of even number dated 22-6-1976 that the commission may be paid to the sole selling agents on direct sales from 24-7-1975 to 6-11-1975 provided you are satisfied that such sales are attributable to the efforts of the sole selling agents. This is without prejudice to the view the Company Law Board may take in regard to the continuation of sole selling agency for any subsequent period." 15. On a reading of the above two letters, the Commissioner (Appeals) found that the ITO's interpretation of the letters was not correct. He observed as under : " It is not disputed by the ITO that condition (a) was satisfied. The letter dated24-12-1976relaxed condition (b) in respect of direct sales by the company. Such relaxation was given for the specific period from24-7-1975to6-11-1975because the approval of the agreement by the Ministry was given on 24-7- 1975 giving effect from7-11-1970. The use of the word ' shall ' in para 2 of the letter dated 24-7-1975 makes it very clear and logical that the company must follow the conditions (a) and (b) from 24-7-1975 to 6-11-1975 and since the agreement was to end on 6-11- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in holding that the prohibition and subsequent relaxation were only for the period24-7-1975to6-11-1975. We decline to interfere. 18. The next objection relates to the deletion of an addition of Rs. 1,01,231 on account of value of work-in-progress. The assessee values the work-in-progress in respect of an incomplete contract (excess of receipts over expenditure) by the close of the accounting year. Two-third of the said surplus is the value taken, if the contract is fairly advanced, i.e., more than 50 per cent. If the contract has been executed to the extent of less than 50 per cent, then one-third of such surplus is taken into account for valuation of work-in-progress. This method was approved by the Tribunal for the assessment year 1972-73. However, this year there was a deficit in a contract, i.e., expenditure on an incomplete contract was more than the value of bills tendered. The ITO noticed this contract (Job No. 10003) where expenditure was Rs. 13,42,744 and the value of the bills raised was Rs. 10,39,049. The assessee valued the work-in-progress of this contract at the value of the bills so raised. This was less than the expenditure, i.e., work-in-progress was valued at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit in with settled accountancy principles to apply the same method in a reverse case also, i.e., where the expenditure is more than the receipts, as held by the Commissioner (Appeals) the assessee has the option of valuing the stock at cost or market value, whichever is lower, and we, therefore, do not see any strong reason for interfering with the method of valuation adopted by the assessee in this regard. The method is not seen to be unreasonable. The objection for the revenue is rejected. 22. The next objection is that the Commissioner (Appeals) erred in allowing weighted deduction under section 35B of the Act to the extent of Rs. 6,66,742 as against Rs. 85,179 allowed by the ITO. Shri Dave submits that for the reasons stated by the ITO in his order, the relief given by him under section 35B should be upheld as correct and the order of the Commissioner (Appeals) should be reversed in this regard. The assessee's counsel, on the other hand, pointed out that the assessee was not satisfied with even the relief granted by the Commissioner (Appeals) and that further relief is being sought in the assessee's appeal filed before the Tribunal for the same assessment year [IT Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an estimate has to be made on the facts of each case. (b) The assessee was unable to segregate the total expenses on exports from the total expenses incurred at the head office, as well as at the branch it was also not able to segregate expenses on activities relating to export promotion covered by section 35B from the expenses of other activities relating to exports. The first claim put up was based on weight of products sold inIndiaand abroad and in the revised claim the basis adopted was with reference to the proportionate value of domestic sales and exports. The total value of exports was Rs. 4.02 crores and that of domestic sales was Rs. 7.54 crores making a total turnover of Rs. 11.56 crores. The proportion worked out to 35 per cent (exports) and 65 per cent (domestic sales). The entire exports were routed through theBombaybranch. This branch also looked after total domestic sales to the extent of Rs. 3.26 crores out of Rs. 7.54 crores of total domestic sales, i.e., 55 per cent. In view of this, the proportion worked out by the assessee was reasonable. (c) Out of ' export expenditure ' so worked out, a further portion was estimated as relating to export promotion and dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clauses) are inadmissible, in view of the decision of the Special Bench in J.H. Co.'s case. That Bench held that expenditure incurred on journeys within the country for export sales and export buying or supplies was not allowable vide para 37 of its order. The entire claim would be disallowed. (e) Finance charges (Rs. 5,90,760) : The nature of such expenses was clarified neither by the ITO nor by the assessee. The Special Bench has clearly held that bank commission (which would include bank charges) in connection with the realisation of sale proceeds or for discounting facilities are inadmissible vide para 36 of its order. Hence, the assessee's claim would be disallowed fully. (f) Salaries and rent (head office and branch office) : The assessee has claimed 75 per cent of the total expenditure on export activities to be promotional and development expenses. They include salaries and rent paid in respect of head office andBombaybranch. The entire exports are routed through theBombaybranch. It also looks after the domestic sales. The assessee operates export business ' from both the places '. It was not shown that the activities relating to the aspects covered by sub-clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to foreign agents Rs. 6,16,763 3. Commission to Indian agents Rs. 54,154 4. Printing and stationery, etc. Rs. 46,327 5. Postage/telegrams, etc. Rs. 61,134 6. Salaries and rent (head office and branch) Rs. 4,14,748 --------------------- Total Rs. 13,33,484 --------------------- Relief under section 35B at the rate of 50 per cent Rs. 6,66,742 --------------------- The allowance of Rs. 85,179 by the ITO in his order as reported to be rectified shall be substituted by Rs. 6,66,742. The relief works out to Rs. 5,81,563." 27. The revenue's objection is that the relief given by the ITO was correct and should be restored. For the assessee, a chart was filed (pages 112 and 113) and the claim was pressed in full. We heard the parties also. It was common ground that relief should be granted on the basis of the guidelines laid down by the Special Bench in J.H. Co.'s case. (This decision has been accepted by the CBDT also). The revenue has not made it clear in its grounds of appeal, the objections to the Commissioner (Appeals)'s order on an item wise basis. The objection taken is general. The assessee also in its appeal [IT Appeal No. 2557 (Delhi) of 1979] has raised o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------------------------------------------------------------------------------------------------------------------- Amount (%) (Rs.) ------------------------------------------------------------------------------------------------------------------------------------------------ 1 2 3 4(a) 4(b) ------------------------------------------------------------------------------------------------------------------------------------------------ 1. Postage, telegrams, telephones and telex 3,49,340 35 1,22,269 2. Salaries Bombay office 2,35,678 57 1,34,336 Head office 16,84,521 35 5,89,582 3. RentBombayoffice 1,53,703 57 87,611 Head office 3,79,528 35 1,32,835 ------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------ Claimed for Allowed by the ITO Allowed after order dt. Allowance on the basis export markets vide order dated 19-4-79 of CIT (A) of order of CIT (A) development 1-3-78 VIII in Appeal Nos. allowance 307/7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure on maintenance of car as held in his individual assessment after deducting recovery of Rs. 1,800 from him (Rs. 15,000-1,800) 13,200 23, 200 --------------------- Total 1,64,333 Less : Statutory deduction allowable 72,000 --------------------- 92,333 " --------------------- 29. Before the Commissioner (Appeals) it was submitted that the servants and the car's expenditure on which loan was paid for by the company were not used by the directors for their personal purposes. Reference was made to the assessment and appellate orders in the case of one of the directors wherein it was held that the company's car and servants were not proved to have been used for personal purposes by the director. The addition of Rs. 23,200 was, therefore, deleted by the Commissioner (Appeals) and this has become final. The revenue is, therefore, in appeal. 30. It was not in dispute before us that the very basis of the ITO's addition disappeared with the deletion (in first appeal) of the addition made as perquisite on car and servants in the assessment of the director concerned. We decline to interfere. 31. The next objection relates to the relief given by the Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. After hearing the parties and on the facts on record, we find ourselves in agreement with the reasoning and conclusion recorded by the Commissioner (Appeals). In our view, a tractor, as in the instant case, and on the facts on record for this year, cannot be denied development rebate on the ground that it was a road transport vehicle. We decline to interfere. 34. The next objection relates to the deletion of a sum of Rs. 2,16,25,470 added by the ITO as ' on money ' received by the assessee on its sales, in the assessment for this year. It was pointed out before us that this ground of objection was linked with the next and last ground of objection of the revenue, which is to the effect that the Commissioner (Appeals) erred in deleting an addition of Rs. 53,070 made by the ITO on account of under valuation of stock. We, therefore, proceed to consider both the objections together. 35. Shri Dave referred to para 7 of the ITO's order which deals with the addition on account of ' on money '. As observed by the ITO himself, the addition of Rs. 2,16,25,470 was made on the following basis : (i) ' On money ' on perfect pipe Total quantity sold to parties other than sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were seized in the course of a search, confirmed according to the ITO the general practice of charging ' on money ' on sales of all types of pipes and tubes as noted above. The ITO also relied on the seized records of the Surekha group of firms. Some of these firms were distributors of BST goods. Their records also indicated that they had charged ' on money ' on goods purchased from the assessee directly as well as on goods purchased from other dealers which included BST goods and other brand of goods. The ITO further took note of the seized records (of Surekhas) particularly registers marked B-5 and A-7. These registers gave details of dates of transactions, specification of goods, price billed, price actually charged on Surekhas, the resultant ' on money ' particulars regarding rates and types of goods purchased from DST and others during the period 2-4-1973 to 21-10-1973. Purchase of goods from the assessee by Surekhas recorded in B-5 and A-7 registers tallied with the transactions recorded in their regular account books as also in the regular books of the assessee. The ITO, therefore, inferred that the entries in such seized books relating to payment of ' on money ' shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of the addition. 40. The Commissioner (Appeals) then took note or the following specific submissions made before him for the assessee, vide, paragraph 19.01 of his order : " (i) The appellant-company has 400 to 500 dealers throughout the country to whom goods are sold. Details in this respect had been filed but the department did not examine any dealer, not only in the proceedings for the assessment year 1974-75 but also in the proceedings for the assessment year 1972-73 when ' on money ' was alleged and additions were made for the first time. (ii) The total turnover of the appellant was Rs. 12.28 crores including exports while Surekhas had purchased only rejected pipes worth Rs. 6,57,121 and scrap worth Rs. 4,48,952. No other types of goods were sold to Surekhas. There is no evidence of any sort for having charged ' on money ' on goods other than those sold to Surekhas and whatever evidence was relied upon by the department in holding that Surekhas had charged on money and shared with the assessee, had been rejected by the learned Tribunal in the assessment year 1972-73. The same evidence was used in assessment year 1974-75 hence it should meet the same fate. (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndals. In one item, the price was higher by 22.5 per cent and only one item, the price charged was lower than the price charged by Jindals by about 4 per cent. The department has not contradicted these facts nor brought any material to the contrary. (vii) Referring to the point made at (vi) above, it was submitted that the prices charged by the assessee were the real market prices and there was no scope for charging ' on money '. Such scope to charge ' on money ', if at all may be when the prices are charged at less than market rate, as Jindals are stated by the department to have done. (viii) The fact that Jindals and Surekhas have made disclosure after search has no bearing on the appellant's case. The appellant has not been confronted with the details of disclosures, as such, this evidence cannot be used against the appellant. In any case the appellant cannot be asked to explain the entries in the books of others nor do they bind the appellant nor do they disprove the books of the appellant. (ix) The statements of the persons recorded and cited by the ITO do not incriminate the appellant at all. On the other hand, even the second statement of Shri Sita Ram Surekha recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment was also not relied on even in the arguments at the Tribunal stage although it was recorded before the appeal for the assessment year 1972-73 was heard by the Tribunal." 41. It was also contended before the Commissioner (Appeals) that there being no new evidence brought on record and the evidence relied on being exactly the same for this year as for the assessment year 1972-73, there was no case for addition this year also. For this, the reply of the ITO who was present before the Commissioner (Appeals) in the appeal proceedings, was that so far as this year was concerned, there was evidence of specific entries in the books of Surekhas clearly indicating the payment of ' on money ' to the assessee on transactions which fell within the relevant previous year. It was pointed out that Surekhas had made a disclosure after the search in respect of ' on money ' received by them. The facts of duplicate books being found the entries wherein tallied with the entries in the regular books of Surekhas as well as the assessee was also emphasized. 42. The Commissioner (Appeals) considered the above position. He agreed with the assessee's submissions and deleted the addition in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions where no names were given. Pages were torn partly with the result that debit entries regarding payments to various parties were not available. All these show that the seized books were not complete in themselves and it would not be correct to give so much credence to them as done by the ITO. (d) In the instant case, there was no witness who admitted having paid the ' on money ' personally to the assessee. On the other hand, Shri Surekha admitted having received ' on money ' and denied having paid ' on money ' to the assessee personally himself. One Jagdish Prasad was stated to have passed on the ' on money ' to Yograj, an employee of the sole selling agent of the assessee-company. That Jagdish Prasad was not alive for being examined and Yograj denied having received any such amount from Jagdish Prasad or anyone else. It had to be reiterated that the entire evidence had been considered by the Tribunal for the assessment year 1972-73 and hence the finding of the Tribunal for that year had to be followed this year also. Even assuming, the findings of the Tribunal for 1972-73 were not binding for this assessment year, on merits also the evidence relied on by the ITO was not ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from that considered by him for the assessment year 1972-73 and evaluated by the Tribunal in the appeal for that year. Shri Dave submitted that the material considered this year related to this year. The learned counsel for the assessee, however, referred to the detailed analysis of the Commissioner (Appeals) in his order on this point and contended that there was no difference in the evidence of this year and of the assessment year 1972-73 already looked into by the Tribunal. 46. After hearing the parties and on looking into the material on record we find that the Commissioner (Appeals) is correct in concluding that the ITO has acted on the same evidence this year as considered by him for the assessment year 1972-73. In this view of the matter, we find ourselves in respectful agreement with the conclusion reached by the Tribunal for the assessment year 1972-73. We would, therefore, maintain the order of the Commissioner (Appeals) for this year. In other words, we do not find any infirmity in his order in deleting the aforesaid sum of Rs. 2,16,45,470. For the same reasons, we also find that the Commissioner (Appeals)'s deletion of the addition of Rs. 53,070 on account of unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m that day. The assessment should, therefore, have been completed by or before28-8-1976. The assessment having been completed on1-3-1978has to be struck down as a nullity, being barred by limitation. 51. According to the learned counsel, there are four classes of returns. These are : (a) Return under section 139(1). (d) Return under section 139(2). (c) Return under section 139(4)(a). (d) Return under section 139(5). The return under section 139(5) can only be pursuant to a return already furnished under section 139(1) or under section 139(2). So far as the return under section 139(5) is concerned, filing of such a return can be done only once. This is obvious from the word ' therein ' occurring in section 139(5), i.e., when an assessee discovers any omission or any wrong statement either in the return filed under section 139(1) or in the return filed under section 139(2), he may file a revised return under section 139(5). The Legislature could not have intended (the counsel submits) an unfettered privilege being conferred upon a particular class of assessees. The Legislature could not also have intended to restrict the right of other assessees to only one return. Obviou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first return. On the other hand, the accepted position in law is that the first return is relevant for the purposes of deciding concealment and, hence, it cannot be claimed that the first return gets obliterated for all purposes. When section 139(5) uses the phrase ' a revised return ' it clearly refers only to a single return and not to a series of returns. 53. Various authorities were cited before us by both the revenue as well as by the learned counsel for the assessee. One particular decision was against the assessee on the very point in dispute here. This was in the case of Niranjan Lal Ram Chandra v. CIT [1982] 134 ITR 352 (All.). The facts here were : the assessee filed a return under section 139(1) for the assessment year 1966-67 showing a business income of Rs. 55,489. Thereafter, on2-3-1971he filed a revised return under section 139(5) showing an income of Rs. 50,273. A second revised return was filed on8-2-1972showing an income of Rs. 38,138. The assessment was completed on6-2-1973. The assessee contended that limitation had supervened on2-3-1972limitation having run from2-3-1971, the date of filing the first revised return and, hence, the assessment was null and vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abad High Court in this case. Judicial discipline requires us to do this. No doubt law develops on dissent and free discussion. But every dissent does not lead to enlightenment. We would, therefore, following the ruling in Niranjan Lal Ram Chandra's case, hold that the charge of the assessment being a nullity on grounds of limitation is not shown to be valid in law. The assessment cannot be quashed on that ground. This objection of the assessee is, therefore, rejected. 56. The next objection relates to partial disallowance of the assessee's claim for relief under section 35B by the Commissioner (Appeals). As regards this objection, the revenue in its appeal has also taken a corresponding ground. We have considered the entire order of the Commissioner (Appeals) in this regard and have recorded our findings also thereon in paragraph No. 27. The findings there would cover the objection raised for the assessee in this regard in its appeal also. Hence, we do not find it necessary to discuss this objection separately. 57. The next objection relates to disallowance of an expenditure of Rs. 8,721 on account of advertisement and import licence free in respect of a new project for manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel pipes and tubes being carried on the assessee. We decline to interfere. 61. The next objection relates to disallowance of a sum of Rs. 12,000 claimed as business expenditure. The ITO disallowed the claim as it represented penalties imposed by the Excise and Taxation Officer (Enforcement-cum-Assessing Authority) for non-payment of passenger tax on the vehicles owned by the assessee for the purpose of business. The submission for the assessee before the Commissioner (Appeals) was that such penalties were part of passenger tax and, hence, allowable as business expenditure. The facts noted by the Commissioner (Appeals) are : There was some dispute about the payment of passenger tax for the assessment years 1966-67 to 1973-74. The liability for the said tax arose in the year under appeal and was also paid. The authority concerned, however, imposed a total penalty of Rs. 12,000 for the said eight years. This was also disputed. According to the Commissioner (Appeals), this penalty of Rs. 12,000 represented an outgoing arising out of an infringement of law and hence could not be allowed as a business expenditure. 62. The counsel for the assessee reiterated this submission before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possibility of manufacture of raw material, i.e., steel/strips for captive use of the existing plant. Under the head ' General expenses ', the assessee claimed a deduction of Rs. 1,50,000 paid to M.M. Dastur Co., industrial consultants and Rs. 75,000 to Industrial Development Services for exploring the possibility of manufacturing steel strips for captive use of the tube and for acquiring scrap. It was claimed that the project was for procuring raw material for the existing units and hence it was a revenue expenditure. The ITO, however, disallowed it. The Commissioner (Appeals) noted the following in this regard : (a) The new project was meant for manufacturing or acquiring raw material. The ITO did not go into the question whether steel strips were actually required as raw material for manufacturing the existing products (tubes and pipes). Nor did the assessee throw any light in this regard. From the facts available it would be seen that a separate plant was being thought of. Failure of this project did not actually affect the continuation of the existing business. (b) Production of raw material can be a separate activity requiring substantial capital. There are cases wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managing agents or technical consultancy or the like and earned profits. If, however, the project was unsuccessful, the assessee wrote off the expenses. For the assessment years 1966-67 and 1967-68 the assessee claimed deduction of Rs. 9,865 and Rs. 10,785 respectively being project expenses incurred in a newsprint paper mill project which did not materialise. The Tribunal held that such expenses to be of revenue nature as the assessee's business was promotion of new ventures [Emphasis supplied]. The Madras High Court upheld the decision of the Tribunal. It held that the expenses were incurred by the assessee in the course of business as promoter of companies or as managing agents and with a view to augmenting their income. On the facts before us, if we apply the ratio of this case, we have to uphold the orders of the authorities below, no doubt, no asset of an enduring nature resulted from the expenditure. It is, however, not the business of the assessee to promote projects as in the case before the Madras High Court referred to above. Expenditure incurred for the purpose of or with a view to acquire a capital asset could, therefore, be rightly looked upon as capital in nature. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are allowed in part. Per Shri U.S. Dhusia, Judicial Member --- I am in full agreement with the finding of my learned brother except for those contained in paras 47 to 55. The assessee has raised a plea that the assessment was time barred. His learned counsel had raised several pleas which we would shortly notice. But my learned brother, relying on the decision of the Allahabad High Court in the case of Niranjan Lal Ram Chandra, sought to reject the pleas raised on behalf of the assessee with the observation that judicial discipline required that if a Supreme Court decision was not available on the subject, the Tribunal must follow the decision of a High Court because, in his view, dissent would not lead to enlightenment in the case in hand. I am unable to see the light which my learned brother has seen from the Allahabad High Court decision in respect of the pleas raised by the learned counsel for the assessee. The learned counsel for the assessee had claimed that according to the provision contained in section 139(5), it was not open to an assessee to file a revised return more than once. According to him, law did not permit an unfettered licence to an assessee in this m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the assessment is made '. Can one have any doubt about the time indicated by this expression ? If no return is filed under sub-section (5) of section 139, no one will dispute that assessment would fall to be made within the time indicated by clause (a) or (b) of sub-section (1) of section 153. For the time being I rule out that it is a case falling within clause (c) of sub-section (1) of section 271, i.e., involving penalty for concealment which is also the case before us as neither parties contended otherwise. In normal non-penalty assessment time will be set by the limit provided in clause (a) only. To be precise, in the case in hand, it will be31-3-1977. Therefore, as the assessment will be required to be made on or before31-3-1977, a return under section 139(4) could not be filed after this date, i.e., after31-3-1977. Similarly, it follows that a revised return under section 139(5) could not be filed after this date-31-3-1977. Therefore, a revised return to be filed is to be filed before the assessment is made, i.e., in our case before31-3-1977only. It is for this reason a return filed under sub-section (4) and a revised return under sub-section (5) of section 139 after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 139, as has been illustrated above. When a second return is filed the first revised return has been admitted by both parties to lapse or to lose its operation and effect. It is the subsequently revised return which is to be looked upon as the one revising the original return and it is this return alone which has the effect of extending the time limit as provided in clause (c) of sub-section (1) of section 153. An earlier revised return which being supplanted by a subsequent return and having lost its legal effect cannot be still considered to be extending the time limit, as provided in the aforesaid clause (c). There is no authority or support available from any provision of law in favour of this view, nor does it affect the validity or otherwise of the later revised return. The later revised return has to stand upon its own validity in the background of the original return and ' the date of assessment ' as indicated above to have effect upon the original return. It cannot depend upon a revised return which having been substituted has lost its effect and operation. If it were otherwise, there would have been a firmer expression in sub-section (1) of section 153. There wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made ' on this date. A revised return filed after this date would be undoubtedly considered an invalid return. Therefore, the revised return filed on29-8-1975being one filed before the prescribed date of assessment, i.e.,31-3-1977was a valid revised return but this revised return, followed by a second revised return filed on10-2-1977lost its effect and operation. The second revised return filed before the prescribed date of assessment, i.e.,31-3-1977was also to be considered a valid revised return. This extended the period of assessment by twelve months following the date of filing the return on10-2-1977that is up to10-2-1977. An assessment up to this date could not be considered barred by time. The assessment was, however, made on 1-3-1978-a date which fell beyond the period of twelve months from the date of filing of the second revised return. Could the assessment be saved on account of the third revised return having been filed on23-1-1978? I have already brought out the date of assessment as prescribed by clause (a) of sub-section (1) of section 153 as31-3-1977. The third revised return having been filed after the date of assessment as provided in clause (a) of sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed by it on23-1-1978is not a valid return, that the assessment on the basis of the second revised return should have been completed on or before10-2-1978and that the same having been completed on1-3-1978is barred by limitation. The department's case, on the other hand, is that the third revised return is as valid a return as the first and/or the second revised returns and so the assessment would have been in time if completed on or before23-1-1979. The learned Accountant Member has dealt with this issue in paragraphs 47 to 55 of his consolidated order while the learned Judicial Member's entire order running into seven paragraphs deals with this issue only. 5. Besides, strongly relying on the order of the learned Judicial Member, Shri Sharma, the learned counsel for the assessee, has reiterated that section 139(5) contemplates ' a ' revised return which means one revised return only and not more than one. According to him, the use of the expression ' therein ' in the sub-section indicates that revised return can be filed, only if there is omission or wrong statement in the return furnished by the assessee under sub-section (1) or (2). In other words, his submission is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the period specified ', etc. Such a provision having not been made in section 139(5) it will be too much to assume that the expression ' assessment is made ' in section 139(5), should have a different meaning from what it has in section 139(4). According to the revenue, the interpretation sought to be given by the learned Accountant Member does not lead to any absurdity at all. On the other hand, the interpretation given to the provisions by the learned Judicial Member leads to absurdities. For instance, in this very case, the assessee has filed not one but three revised returns. The ITO has accepted the stand taken by the assessee, namely, all the returns filed by the assessee are valid returns. Now, when the assessee finds that such an argument does not suit its convenience, it turns round and argues that the third revised return is not a valid return. It may be mentioned that reference has been made to the following decisions at the time of hearing-Niranjan Lal Ram Chandra's case, Bhaskaran v. Addl. ITO [1963] 47 ITR 334 (Ker.), S.S. Gadgil v. Lal Co. [1964] 53 ITR 231, 239 (SC) and Dr. S.B. Bhargava v. CIT [1982] 136 ITR 559 (All.). 7. I have carefully considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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