9911796707
TMI Blog1997 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of the profession or business. - - - - - Dated:- 17-9-1997 - Judge(s) : AJOY NATH RAY., BARIN GHOSH. JUDGMENT Although we have issued rule on all three questions sought to be got referred to us, yet on hearing both sides on the returnable date and thereafter we are of the final and firm opinion that the rule should be discharged. Since we are discharging the rule, some reasons and background are necessary. The assessee was, on an admitted basis, liable to be taxed in accordance with the provisions of section 44BB of the Income-tax Act, 1961. Roughly speaking that section provides that when a non-resident receives amount for supplying plant and machinery for production of mineral oils, the amount paid to the assessee is not wholly to be taxed as profits and gains of business or profession but that only 10 per cent. of such amount is to be so taxed. The assessment years in question are 1983-84 to 1989-90. There were two batches of appeals which reached the Tribunal in this regard. The first batch of appeals was concerned with the power of rectification under section 154. In the assessment made under section 143 of the Act there had not been included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was also submitted by Mr. Dastur that tax being never payable out of India the bracketed portion in sub-section (2)(a) would indicate payment of tax to be outside the ambit of this sub-section. The first question sought to be referred raises the issue of inclusion of the tax paid for the assessee by way of rectification. Surely when the above provisions are admittedly to be applied to the assessee, it is not beyond debate or dispute whether in spite of application of such provisions the amount of tax paid would become liable to be taxed at all, even to the extent of 10 per cent. of it as the specially defined profits and gains of the business of the assessee must come within the meaning of the words used in section 44BB. That only matters beyond debate or dispute can form the subject-matter of rectification, is so well settled that an authority is hardly needed for that proposition. Yet we refer in this regard to the case cited by Mr. Dastur being the case of T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 (SC). Mr. Agarwal, appearing for the department, submitted that in the case of Emil Webber v. CIT [1993] 200 ITR 483, the Supreme Court has given a pronounceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen an order is made, say, against the rules of natural justice or where a statutory authority otherwise exceeds its jurisdiction. Thus, in the instant case, when rectification was sought to be made by including within the income of the assessee the amount of tax paid on its "behalf", the officer sought to operate on a territory which was not, so to speak, an undisputed territory. The Tribunal has held so. The Tribunal has refused to refer the question of the rectifying officer being, in the instant case, right in law, and we are fully in agreement with the Tribunal in this regard. There is no point of law which arises from the records which would persuade us to hold that even in the above facts and circumstances, it is necessary further to examine whether the rectifying officer proceeded on an undisputed basis for rectifying obvious errors and mistakes. Mr. Agarwal also added that because the question whether jurisdiction under section 154 could be used is itself a matter of debate or dispute, we should finally settle it after the questions are referred to us. With respect, this is again a logical fallacy. If it is a matter of debate and dispute whether the jurisdiction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no hesitation in reaching this conclusion that the Tribunal was not asked to consider whether the consideration of a new ground by it led to an error of law on the records and the reasons given in this decision. Since the Tribunal was not asked to decide on this question, the applicant-Department never applied for relief to the first authority to which it is bound to go for relief in the first instance. Not having done so, an order for mandamus against that authority cannot be asked for before us because that authority is not in any error or in any breach of duty. We respectfully follow the above principle laid down by the Supreme Court and by applying that principle, the second question sought to be referred must also be refused and the rule in that regard also be discharged. Additionally, there are authorities to the effect that where all the facts are before the Appellate Tribunal, a pure new ground of law can usually be allowed to be taken by a party provided that party has not disentitled itself by adopting any unfair means. If that new ground has been intentionally suppressed or some such disentitling factor can be shown against that party, the additional ground might be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the assessee is an amount paid on behalf of the assessee to a person, which is the Indian exchequer. This amount is paid on account of service and facilities in connection with supply of plant and machinery for extraction of oil. It can hardly be disputed that it is so. Had the assessee not made the supplies and rendered the services the tax on its behalf would not have been paid. Had the assessee not been paid hundred, the ONCC would not have paid 6.5 to the Department as any separate payment on any separate head or count. The Department, however, submitted through Mr. Agarwal that if the assessee's case is that the payment of tax is not a payment made on its behalf to any person, then the assessee itself argues that section 44BB of sub-section (2) is inapplicable. If the assessee itself argues that section 44BB is inapplicable, then the payment of tax on behalf of the assessee must be an ordinary payment and must class as an ordinary and usual gain or profit of business or profession. If it is such an ordinary gain of business then it should be ordinarily taxable. In other words, the tax should be 65 per cent. on 6.5 and not 65 per cent. on 0.65. With respect, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entirety of that amount taxable under sections other than section 44BB. Only 10 per cent. of 6.5 can be charged under section 44BB and that has been done by the Tribunal. Since any other view which is less favourable to the assessee is impossible on this question, we discharge the rule on this question also. For the sake of convenience, we set out below the questions which were the subject-matter of the rule issued by us: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that where tax payable on behalf of the assessee was not included in the order under section 143(3), the inclusion of the same in the order under section 154 was a debatable issue and was not within the jurisdiction of section 154 of the Income-tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in admitting the additional evidences which were not raised before the lower authorities? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that only 10 per cent. of tax liability of nonresident assessee paid by the OIL and ONGC can be t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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