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TMI Blog1989 (1) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... . A show-cause notice under section 263(1) was accordingly issued to the assessee calling upon it to explain as to why the assessment should not be set aside or enhanced. 3. Before the Commissioner it was submitted on behalf of the assessee that it was entitled to investment allowance under section 32A as exhibition of films amounted to production of a thing as contemplated under that section. The Commissioner rejected the assessee's contention. He was of the view that no new article or thing was produced by the assessee while exhibiting films in the theatre, and, therefore, the condition laid down for allowance under section 32A was not fulfilled. He accordingly directed that the claim under section 32A amounting to Rs. 76,600 should be disallowed. Aggrieved, the assessee has come up in appeal before the Tribunal. 4. Shri L.S. Dewani learned counsel for the assessee submitted that investment allowance of Rs. 76,600 was claimed by the assessee on a projector, air-cooling plant and electric equipment and fitting. The assessee was entitled to investment allowance on air-cooling plant and electric equipment and fitting as it manufactured or produced cool air which was supplied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of the contention that the intention of the Legislature was not to introduce the new Explanation retrospectively, we were taken through Notes on Clauses in the Finance Bill, 1988, as also through Memorandum explaining provision of that Bill. Shri Dewani invited our attention to clauses (a) and (b) of the Memorandum explaining the provisions of the relevant clauses (a) and (b) of the Finance Bill, 1988, and pointed out that it shows that the Commissioner will be competent to revise an order of assessment passed by an Assessing Officer on all matters except those that have been considered and decided in appeal. The use of the word " will " was emphasised to show that the intention of the Legislature was to introduce the amendment prospectively or with effect from a future date. 7. In support of the contention that the amendment introduced in section 263(1) substituting the existing Explanation in place of the old Explanation is not retrospective, reliance was also placed on the decision of Jaipur Bench of the Tribunal in case of Vimal Trading Corpn. v. ITO [1988] 41 Taxman 75 (Tax-Mag.). It was, however, candidly stated by Shri Dewani that on similar issue the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tre v. Eighth ITO. 10. Regarding the legal plea raised on behalf of the assessee, Shri Agrawal placed reliance on the decision of the Madhya Pradesh High Court in the case of Vithal Textiles Wool Traders, and submitted that in the absence of any other decision to the contrary on the point, the aforesaid decision is binding on the Tribunal. In support of this contention, reliance has been placed on the well known decision of the Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. Shri Agrawal then submitted that the use of the words " for the removal of doubts, it is hereby declared that, for the purposes of this sub-section, .... " in the Explanation substituted with effect from 1-6-1988, clearly indicated that the new Explanation was introduced simply to clarify the legislative intent which was there from the very beginning when section 263 was enacted and to declare the law to make the intention of the Legislature clear. According to Shri Agrawal, the amendment being declaratory, will operate retrospectively despite the fact that it was introduced with effect from 1-6-1988. Shri Agrawal further submitted that the date of commencement or introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B ; and. . . . ". 12. It was held by Their Lordships of the Madhya Pradesh High Court in the case of Vithal Textiles Wool Traders, that the Explanation introduced with effect from 1-10-1984 made it clear that it was enacted to remove doubts. It was further held that though the Explanation came into force from 1-10-1984, the Amending Act being declaratory, must be held to be retrospective. While taking this view, Their Lordships drew support from the decision of the Supreme Court in the case of Central Bank of India v. Their Workmen AIR 1960 SC 12 and the decision of the Supreme Court in Chhanan Singh's case. Shri Dewani sought to distinguish the decision of the Madhya Pradesh High Court on two counts. It was submitted that even before insertion of the Explanation with effect from 1-10-1984, the Madhya Pradesh High Court had taken the view that an order passed by the ITO in accordance with the directions of the IAC under section 144A or 144B could be revised by the Commissioner in exercise of his powers under section 263(1). Secondly, according to Shri Dewani, the Explanation introduced with effect from 1-10-1984 related to procedural matters whereas in the instant case the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner will not have jurisdiction to revise an order passed by an Assessing Officer which had been the subject-matter of an appeal, even on matters which had not been considered and decided in such appeal. The said decision of the Bombay High Court does not lay down such a proposition either expressly or by implication. In the instant case, since the ITO had allowed investment allowance, this issue was not the subject-matter of appeal before the CIT (Appeals) and this issue was, therefore, neither considered nor decided by him. So, in view of clause (c) of the existing Explanation to section 263(1), the Commissioner retained jurisdiction to revise the assessment order on the issue relating to the assessee's claim for investment allowance under section 32A. The decisions of the Bombay High Court, in view of the Explanation, can no longer be relied upon in support of the contention that the entire order of the ITO merged in the order of the CIT (Appeals) and, therefore, the Commissioner had no jurisdiction to revise the assessment order on the aforesaid issue which was neither considered nor decided by the CIT (Appeals). So, the legal plea raised on behalf of the assessee has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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