9911796707
TMI Blog2014 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof remained unabsorbed, it was carried forward and was partially absorbed for the assessment years 1983-84 to 1986-87. Still some portion thereof remained. It is stated that the appellant sustained losses during the assessment years 1986-87 to 1991-92. Hence, there was no occasion to absorb the balance of the investment allowance. It was only in the assessment year 1991-92 that the claim was made to permit it to set off unabsorbed portion of the investment allowance. Through an order, dated 03.05.1993, the ITO allowed such set off, to the extent of Rs. 8,62,585/-. However, proceedings were initiated under Section 154 of the Act and a notice was issued to the appellant, at a later stage by the ITO. It was mentioned that in view of the judgment of the Supreme Court in C.I.T. v. N.C.Budhiraja & Company 204 ITR 413, the investment allowance ought not to have been allowed. Stating that no reply was issued to the show cause notice, the ITO passed an order, dated 24.01.1994, disallowing the investment allowance, that was set off in the previous assessment year. The appellant filed an appeal before the Commissioner of Income Tax (Appeals). The appeal was allowed through order, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that, each assessment year being a unit by itself, it was always competent for the respondent to examine as to whether the investment allowance, which was carried forward, can be allowed for the subsequent years, particularly, when there is change of law. Placing reliance upon the judgment of the Supreme Court in Instalment Supply (Private) Limited v. Union of India 12 STC 489, he submits that it is always competent for an Assessing Authority in a particular year, to adjudicate the matter in accordance with law and observations or orders passed, if any, in the previous assessment years, would not bind him. He has also placed reliance upon the judgment of the Supreme Court in Commissioner of Income-Tax v. Manmohan Das 59 ITR 699, in support of his contention that each assessment year is a unit and the concept of res judicata is alien to the adjudication under the Act. The principal controversy in the appeal is as to whether it was competent for the respondent to invoke Section 154 of the Act in the facts and circumstances of the case. This takes in its fold, the other subsidiary legal proposition, namely whether it is competent for an ITO to ignore the findings recorded in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be sustained. He has also briefly explained, the purport of the judgment of the Supreme Court in N.C.Budhiraja & Companys case (supra) and took the view that neither the facts permit, nor the law allows the exercise undertaken by the respondent. The Tribunal, however, has struck a different note. According to it, the matter is covered by the judgment of the Supreme Court in N.C.Budhiraja & Companys case (supra). After referring to the facts of the case, the Tribunal concluded its discussion with this: From the order of the Commissioner of Income-tax (Appeals), we find that the principles enunciated in the above judgment of the Supreme Court has not been properly understood. Hence, in the light of the said judgment of the Supreme Court, the order of the first appellate authority is set aside and the appeal filed by the Revenue is allowed thereby confirming the order of the assessing officer concerned. Two questions arise for consideration. The first is as to whether it was competent for the respondent to invoke the jurisdiction under Section 154 of the Act, in the facts of the case. This, in fact, is the purport of the substantial questions of law framed by this Court. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it difficult to treat such a far-reaching exercise as the one of mere correcting mistake. Another part of it is, that since the order of the respondent has the effect of altering the nature of the investment allowance, it dates back to the order passed for the assessment year 1983-84. Thus, viewed from that angle, it is barred by sub-section (7) of Section 154 of the Act. Things would have been different altogether, had it been a case where the ITO has undertaken any independent exercise to determine the character of the allowance during the relevant assessment year i.e. 1991-92. He did nothing more than allowing deduction of the amount, which was carried forward from the previous assessment years. He fell in line with his predecessors, who dealt with that very allowance for the assessment years 1983-84 to 1986-87. Therefore, we are of the view that the exercise of powers under Section 154 of the Act, by the respondent to disallow the investment allowance to the appellant, is impermissible in law. The second question is closely interlinked with the first one. However, it has a different dimension altogether. The determination of the character of investment allowance claimed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it was competent for the ITO, who dealt with the matter in the assessment year 1951-52, to decide the admissibility of the claim, and proceed accordingly. In the instant case, the situation is exactly the opposite. The successive ITOs from 1983 onwards did not express any reservation about the admissibility of the investment allowance claimed by the respondent. However, from the judgment of the Supreme Court, cited above, it is seen that the ITO, who dealt with the assessment of a subsequent year, can independently deal with the claim. Learned Senior Counsel submit that it was competent for the respondent to deal with the investment allowance for the assessment year 1991-92 independently, and was not bound by the view expressed by his predecessors, in the preceding assessment years. If it were to be a case where no deduction whatever was permitted of the investment allowance, though claimed in the preceding assessment years, and the respondent addressed the question, the contention of the learned Senior Counsel for the Department can certainly be accepted. Where however, the determination as to the admissibility has already taken place and substantial part of it was enforced b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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