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TMI Blog1989 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... he book results of the Pondicherry Unit stands vitiated because it does not take into account some relevant material and takes into account some irrelevant material and considerations ? (3) Whether, on the facts and in the circumstances of the case, the loss of Rs. 4,498 suffered by the assessee on the sale of Government securities in its Naini Unit was rightly disallowed as a capital loss ? (4) Whether, on the facts and in the circumstances, the Tribunal erred in law in refusing to entertain the additional ground for the allowance of Rs. 45,930 on account of differential excise duty ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of interest under section 18A(6) could not be considered by it ? (6) Whether, on the facts and in the circumstances of the case, the claim of the assessee for deduction as a trade liability of Rs. 1,63,609 was rightly allowed by the Tribunal ?" Out of the above, the first five questions are at the instance of the assessee, whereas the last mentioned question is at the instance of the Commissioner of Income-tax, Kanpur. It was fairly conceded by learned counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which was disclosed to the bank in excess of the value of stock held by the assessee. A similar addition was made in the immediately preceding year and the decision of the Income-tax Appellate Tribunal was upheld by this court on reference. That case is since reported as Swadeshi Cotton Mills Co. Ltd. v. CIT [1980] 125 ITR 33. In fact, in sustaining the addition in the year in dispute, the Tribunal had relied upon its own decision for the earlier year. The facts and circumstances giving rise to the disputed addition in the year under reference being the same as in the preceding year and in view of the decision of this court in the assessee's own case, we answer question No. 2 in the negative, in favour of the Revenue and against the assessee. As regards question No. 3, the assessee claimed a business loss of Rs. 4,498 on the sale of Government securities in its Naini unit, which was disallowed as a capital loss. During the previous year, the assessee subscribed to the issue of Government securities, namely, 4% U. P. State Development Loan, of the face value of Rs. 1,66,000 through the Allahabad Bank on August 29, 1960. These securities were sold by the bank on behalf of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also answered in the affirmative against the assessee and in favour of the Department. Coming to question No. 6, it may be observed that the Income-tax Officer disallowed the assessee's claim as business expenditure of an amount of Rs. 1,80,000 being the provision for damages payable to the Provident Fund Commissioner for delayed payments of provident fund contributions under the Employees' Provident Funds Act, 1952. The disallowance was made on a two-fold ground, namely, that the payment was in the nature of a penalty and that the liability did not relate to the year in dispute. On appeal, the Income-tax Appellate Tribunal allowed the assessee's claim but reduced the amount to Rs. 1,63,609 on the finding that the actual liability was to that extent only. The Tribunal took the view that the liability was incurred by the assessee in its character as a trader and the amount in question was a revenue deduction, irrespective of whether it involved breach of contract or a breach of certain statutory provision. The correctness of the view taken by the Income-tax Appellate Tribunal is challenged in this reference by the Commissioner of Income-tax through question No. 6, as stated ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal. In order to appreciate the controversy arising for consideration, we may read sub-section (4) of section 33 of the Indian Income-tax Act, 1922, which provides for the power of the Tribunal to pass orders on appeal. It says : "The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. " The important and crucial words are "pass such orders thereon as it thinks fit". This expression has been the subject-matter of judicial scrutiny before the Supreme Court in a number of cases where the scope of the Tribunal's jurisdiction has been discussed. In CIT v. Nelliappan [1967] 66 ITR 722 (SC), it was observed (headnote) : "In hearing an appeal, the Tribunal may give leave to the assessee to urge grounds not set forth in the memorandum of appeal and in deciding the appeal, the Tribunal is not restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. The Tribunal is not precluded from adjusting the tax liabilities of the assessee in the light of its findings merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal merely because such point had not been raised or argued by the party seeking leave or for that matter by either party at an earlier stage of the proceedings. It is a different matter that, in a given case, the Tribunal, may not feel inclined to grant the leave in exercise of its discretion that it possesses in connection with the raising of a new contention or ground. Rule 11, as already observed, does not debar an assessee from taking up a new ground. In the hierarchy of authorities, the Appellate Tribunal is the final fact-finding authority. It is a court of appeal of fact as well as of law. The powers of the Tribunal referable to the said rule 11 are judicial in nature and cannot be exercised in an arbitrary manner at the pleasure of the Tribunal. Whether permission should be given or not will depend basically on the facts of each case. In the present case, the Income-tax Appellate Tribunal refused to accord its permission for raising an additional ground of appeal in the view that the assessee had not claimed the disputed deduction in the proceedings for the assessment year 1961-62 before the lower authorities and thus there was no occasion for those authorities to apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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