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TMI Blog2005 (9) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 35(1)(ii) of the I.T. Act. The Assessing Officer was of the view that since the assessee-company is a foreign company, the same was liable to tax at the rate of 25 per cent on gross amount of dividend, interest income etc. as per the provisions of section 115A. He also observed that the deduction under Chapter VI-A are not permissible to the assessee-company. The Assessing Officer accordingly passed the order against the assessee. The assessment orders for the assessment years 1992-93, 1993-94 and 1995-96 were passed under section 143(3) of the IT Act. However, for assessment year 1994-95 the return was processed under section 143(1)(a) of the I.T. Act and the status of assessee-company was taken as foreign company as declared in the returns. During the course of arguments ld. counsel for the assessee conceded that the assessee had disclosed its status in the returns to be a foreign company. However, the CIT(A) has mentioned that the assessee has shown its status to be of domestic company in the return of income. Ld. counsel for the assessee also submitted that though CIT(A) has mentioned that in assessment year 1993-94 return was processed under section 143(1)(a) but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee in support of his contention filed the opinion of Shri V.H. Patil, Advocate, Supreme Court. Ld. counsel for the assessee relied on the same, and submitted that assessee is a private limited company registered as a company limited by guarantee under the registration of Companies Act Sikkim, 1961 on 10-10-1984. The registered office of the company is situated in State of Sikkim, M.G. Marg, Gangtok. The law relating to incorporation of companies is called the Registration of Companies Act Sikkim, 1961 which came into force by notification under Sikkim Darbar Gazette, January 1962, part-V. He has submitted that the objects of the company which extend to the whole of India are to provide, relief to poor, education, medical relief and the advancement of say other objects of general public utility and other activities related thereto including research etc. As per clause 5(2) of the Memorandum of Association, there is a prohibition of distribution of dividend/profits of the company to its members. He has further submitted that Sikkim became a component State of the Indian Union by and under the Constitution (36th Amendment) Act, 1975, which inserted article 371F in the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as defined under section 2(26)(i) of the I.T. Act. Ld. counsel for the assessee in support of the contention also filed copy of the notification under article 371F by which income-tax was made applicable to the State of Sikkim from 1-4-1989 i.e., assessment year 1989-90 and subsequent by section 26 of the Finance Act, 1989 the date was postponed to 1-4-1990 i.e., assessment year 1990-91. Ld. counsel for the assessee relied upon judgment of Kerala High Court in the matter of CIT v. A.P. Parukutty Moopilamma [1984] 149 ITR 1311 and order of ITAT Delhi Bench 'D' in the case of Pasupati Nath Commercial (P.) Ltd. v. CIT [2002] 121 Taxman 33 (Mag.) and submitted that the status of the company to be determined each assessment year and description of the status by assessee himself is not conclusive. Ld. counsel for the assessee submitted that merely assessee has disclosed its status to be foreign company in the returns of income is not enough to conclude that assessee is a foreign company as is held in earlier assessment years. Ld. counsel for the assessee submitted that in earlier year ITAT Delhi Bench rejected the contention of the assessee vide order dated 25 April, 2003 with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) mentioned in the impugned order that in assessment years 1992-93 and 1995-96 assessment orders under section 143(3) are under challenge. CIT(A) also mentioned that in assessment years 1993-94 and 1994-95 the intimation under section 143(1)(a) was in dispute before him. However, considering the above submission and material on record, we are of the view that the position is not so as in assessment year 1993-94 the orders under section 143(3) was challenged before CIT(A). Only for the assessment year 1994-95 the intimation under section 143(1)(a) was in challenge. Similarly, we find that CIT(A) has mentioned in para 3 of the impugned order that in the return of income the status of the assessee has been shown as domestic company. However, ld. counsel for the assessee has very fairly admitted before us that in fact assessee had shown the status in the return of income to be a foreign company but according to him this fact is not correct as the Sikkim is part of India and Income-tax Act is applicable and, therefore, assessee is domestic company as provided under Income-tax Act. Therefore, we first take up the matter for the assessment years 1992-93, 1993-94 and 1995-96 for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs are continuation of assessment proceedings and aims at determining the correct income and tax liability of the assessee. We accordingly admit the above additional ground in all the assessment years i.e., 1992-93, 1993-94, 1995-96. However, equally we are of the view since the point is raised for the first time before the Tribunal, therefore, proper opportunities should also be given to the authorities below. Therefore, instead of deciding the additional ground by the Tribunal, we restore additional ground in all the above-mentioned assessment years to the file of CIT(A) with direction to decide the same as per law after allowing reasonable opportunity of being heard to the assessee as well as Assessing Officer. The remaining ground of appeal are entirely dependent upon findings given on this issue as to whether the assessee is an Indian company under the provisions of section 2(26) of the I.T. Act. Therefore, we feel that the other grounds should also be restored to the file of CIT(A) with direction to re-decide these grounds on merits for deduction under section 80GGA after determining whether the assessee was an Indian company or a foreign company. We accordingly set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on available in such return, accounts or documents, in prima facie inadmissible, shall be disallowed : Provided further that an intimation shall be sent to the assessee whether or not any adjustment has been made under the first proviso and notwithstanding that no tax or interest is due from him : Provided also that an intimation under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable." 10. The above provision clearly shows that Assessing Officer could make prima facie adjustments to the income or loss declared in the return on the basis of information available in such returns, accounts or documents which is prima facie admissible but which is not claimed in the return, shall be allowed. Therefore, it was necessary for the assessee to give complete information in the return of income and if the facts are clear than the Assessing Officer could make prima facie adjustment to allow the necessary relief even though not claimed in the return. Admittedly in this case assessee has shown the status to be of foreign company. Therefore, at the time of processing the return Assessing Officer was bound t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return of income in prescribed time but assessee failed to do so and on the basis of earlier years orders filed return of income in the status of foreign company. The Assessing Officer on such information available in the return of income, accounts and documents processed the return of income in accordance with the provision of section 115A of the I.T. Act. In our view the Assessing Officer rightly disallowed the claim of assessee for deduction under section 80GGA as it was prima facie inadmissible in law in the facts and circumstances of the case and on the basis of material available on the record while processing the return under section 143(1)(a). We therefore, do not find any irregularity or illegality in the orders of the authorities below in taking such view against the assessee. We, therefore, in this view of the matter and considering the fact that return was processed under section 143(1)(a) on the basis of information contained in the return of income, we do not find any justification to interfere in the orders of the authorities below in the assessment year 1994-95. This appeal of the assessee is dismissed. 11. As a result, appeals of the assessee for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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