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TMI Blog1986 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... hicks by following two methods. The first method it adopts is to purchase one day old chicks in batches from Rani Shaver, Delhi, tend them and obtain eggs throughout their fertility stage, hatch them by putting them in incubator and produce or manufacture one day old chicks artificially or mechanically and sell them to poultries. The second method is to purchase eggs also in order to hatch them and produce one day old chicks artificially. Therefore, the primary business of the assessee-company is to manufacture and sell one day old chicks. We are also told that the assessee-company manufactures poultry feed and sells it to poultry farmers. Original assessment of the assessee-company was completed on 12-4-1982. During the course of the assessment proceedings, it appears that investment allowance was prayed for. However, the ITO negatived the claim of the assessee for investment allowance for the reasons discussed by him in detail while passing assessment orders for the assessment years 1978-79 and 1979-80 dated 22-3-1982. An appeal was filed, inter alia, against the assessment passed for the assessment year 1980-81 against the assessee-company before the learned Commissioner (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich he had computed the investment allowance which the assessee is entitled to at Rs. 4,08,842 on the basis of the value of the plant and machinery. A copy of the modificatory order is furnished in the second paper book filed on behalf of the assessee. The value of plant and machinery taken by the ITO for purposes of granting investment allowance is as follows : . Rs. Electrical fittings 1,87,533 Setters Hatchery 8,77,049 Generator 4,53,855 Poultry Equipment 98,730 Furnace 8,720 Crane 10,480 Total 16,35,369 Allowance under s. 32A @ 25per cent 4,08,142 5. As the matters stand thus, on 29-8-1983, the assessee-company filed an income-tax return for the assessment year 1980-81 only, further adding back Rs. 51,573.95 as purchases not supported by proper vouchers. The reason given for filing the return even after the assessment was complete is stated in the letter dated 29-8-1983 accompanying the return. The last para of the letter, which is relevant for our purpose, is as under : "As you are aware we had given an assurance to the authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to on the additions made to live-stock during the assessment year." So also, an additional ground dated 16-12-1983 claiming agricultural development allowance under section 35C of the Act was also filed by the assessee-company before the learned Commissioner (Appeals)-II. As new claims were put forward before him, the learned Commissioner (Appeals) called upon the ITO to file her objections, if any, for those new claims. The ITO by her letter dated 20-2-1984, stated that claim of investment allowance on parent stock as well as the deduction under section 35C represent claims which were never put forward at the time of assessment and they were fresh claims. Having specifically put that objection in the first instance in the opening para itself in her letter dated 20-2-1984 to the Commissioner (Appeals), the ITO offered to say how the fresh claims were untenable on merits in her view. The learned departmental representative furnished a copy of the letter dated 20-2-1984 to this Tribunal. The learned Commissioner (Appeals), however, while passing the impugned order dated 3-9-1984, did not consider as to how fresh claims can be put forward in a reopened assessment. He simply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the claims amounts to rejection of the objection put forward on behalf of the revenue that the appeal regarding the new claims is not entertainable, yet, in the stand of the respondent as he now is, he is entitled to support the order of the Commissioner (Appeals) regarding his ultimate decision on the ground that the fresh claims are not entertainable in reopened proceedings. He relied upon two decisions--CWT v. C. Ravindran [1977] 107 ITR 547 (Ker.) and CWT v. Ballarpur Industries Ltd. [1979] 118 ITR 711 (Bom.). In the said case, the Kerala High Court, following the decision of the Bombay High Court in Kevaldas Ranchhodas v. CIT [1968] 68 ITR 842 where it was held that under section 34(1)(a) of the Indian Income-tax Act, 1922 ('the 1922 Act') which is the predecessor of section 147 of the Income-tax Act, recomputation can take place only with a view to gathering any income escaping assessment and that it was clear from the section itself that it was not intended for the benefit of the assessee but only for the benefit of the revenue. They have also followed the Allahabad High Court decision in Sir Shadi Lal Sons v. CIT [1973] 92 ITR 453, and they have quoted the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was followed by the learned Commissioner (Appeals), while disposing of the appeal in the first instance, the parent bird is to be taken as a plant and following the said view adopted by the revenue itself, in not allowing investment allowance on the additions made to the live-stock during the accounting year in question is a mistake apparent on record which can be rectified under section 154, but the assessee thought that it could as well agitate the same matter even before the learned Commissioner (Appeals) who was considering the appeal. Therefore, it is the contention of Shri B. Satyanarayana Murty that the additional investment allowance claimed as well as agricultural development allowance claimed before the Commissioner (Appeals) should be considered to be the claims made invoking the right given to the assessee under section 154. Shri Satyanarayana Murty invited our attention to the commentary in Chaturvedi and Pithisaria's Income-tax Law, Third edn., Vol. 3, where it is observed as follows : "Similarly, where the statute itself gives an exemption and if that exemption has been inadvertently not claimed by the assessee, it is certainly a case where the taxing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im for some reason or the other. In view of the decision in Navnitlal Javeri's case [1965] 56 ITR 198 (SC), it is obvious that it was the duty of the Income-tax Officer to have followed this particular circular of the Central Board of Revenue issued as far back as 1955 and in view of this circular read with Navnitlal Javeri's case [1965] 56 ITR 198 (SC), we are, with respect, unable to agree with these two decisions of the Allahabad High Court." Shri B. Satyanarayana Murty, the learned counsel, contended that the claims which he now put forward are claims to which the assessee-company is duly entitled under law. If the assessee-company inadvertently omitted to make claims regarding them, as per the circular as well as the Gujarat High Court decision, it is the duty of the ITO to bring the right to relief to the notice of the assessee. In view of all the above authorities, he contended that the proceedings cannot be taken to be merely conducted under section 147(a), but they should be deemed to have been conducted under section 154 also. 8. After considering the arguments on both sides, we hold that the extended claim for investment allowance on the purchase of parent birds valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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