9911796707
TMI Blog1989 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... arges for preparation of feasibility report of Calcium Carbide Project for Madras and Mangalore Division." Before the Appellate Assistant Commissioner, it was claimed by the assessee that the addition should not have been made as it was a revenue expenditure. The Appellate Assistant Commissioner, however, found that this was entirely a new project undertaken by the company and, therefore, could not be taken as a revenue expenditure. The disallowance was, therefore, upheld. Before the Tribunal, in support of the ground against the above addition, counsel for the assessee did not submit that it was to be allowed as revenue expenditure. He, however, submitted that the addition made by the Income-tax Officer was illegal. He pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve submitted that the addition was not illegal and the Inspecting Assistant Commissioner had given the directions as contemplated under section 144A of the Act. It was also pointed out that the assessee had been duly heard and there was no denial of natural justice in so far as this point was concerned. The Tribunal, on a consideration of the facts and circumstances of the case, held that the addition of Rs. 25,000 could not be considered to be illegal. It was further held by the Tribunal that the Inspecting Assistant Commissioner could give such a direction under section 144A and the only requirement was that the assessee had to be heard before such direction is given. The Tribunal further observed that, on the merits of the case, no sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make any variation in the income or loss returned which is prejudicial to the assessee and the amount of such variation exceeds the amount fixed by the Board, the Income-tax Officer shall, in the first instance, forward a draft of the proposed order of assessment to the assessee. The assessee, upon receipt of the draft order, may forward his objections, if any, to such variation to the Income-tax Officer within seven days of the receipt by him of the draft order. If objections are received, the Income-tax Officer shall forward the draft order together with the objections to the Inspecting Assistant Commissioner and the Inspecting Assistant Commissioner shall, after going through (wherever necessary) the records relating to the draft order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT [1983] 142 ITR 156, this court held that, having regard to the provisions of section 144B(4), the correct view would be that the enhancement of the assessment as a result of the direction issued by the Inspecting Assistant Commissioner under section 144B(4) on the items not covered by the draft assessment order would be invalid to the extent "it was not covered by the draft". We are of the view that, in the instant case, the direction was not lawful. The contention of Mr. Bagchi is that the question referred by the Tribunal is not the question asked for by the assessee. It is altogether a new question which the Tribunal has no jurisdiction to refer to this court. The question which has been proposed by the assessee in its applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the court held that the reference was not competent. But, in this case, as indicated earlier, no new question has been referred by the Tribunal. The question raised by the assessee was whether the direction of the Inspecting Assistant Commissioner was ultra vires. The question referred to us is whether such direction is lawful. We do not find any difference. Any act done beyond the scope of powers defined by the statutes will be ultra vires. This term has broad application and includes acts prohibited by the statute or which are in excess of the powers granted. Exercise of power in a manner not allowed by law is ultra vires and not lawful as well. We are, therefore, not impressed by the submissions of learned counsel for the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to enable it to obtain bauxite which was the raw material for the production of aluminium. There, the Division Bench of this court held as follows (p. 675) : "In regard to the first question, the Tribunal held that the expenditure incurred by the assessee in prospecting and searching for bauxite mines was not incurred in connection with earning profit but was incurred only with a view to finding out the source from where the assessee could get raw material for its aluminium plant which was yet in the construction stage. Construction of the plant had been completed and production actually started on May 14, 1962. It was not quite correct to say that this expenditure was incurred in its entirety during the construction stage or prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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