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TMI Blog2016 (11) TMI 1718X X X X Extracts X X X X X X X X Extracts X X X X ..... llow as a consequence of, its determination. If the Tribunal rejects the assessee s case on a particular ground, and if such ground affords a certain relief to the assessee without his having to ever any new facts, such relief cannot be denied on the footing that the assessee never claimed it. If the assessee did not claim it, the Tribunal must grant it suo motu, as a matter of law, if the relief does follow as a legal incident. Our Court held that the alternative submission did not amount to raising of an additional ground of appeal but the submission was a different facet of the same controversy; it was merely consequential to the finding of the tribunal against the assessee. The submission would not arise in case the tribunal accepts the assessee s contention for deduction of the amount as revenue expenditure; but where the tribunal turns down the assessee s claim and holds it to be capital expenditure, it is the duty of the Tribunal, even without an alternative submission, to pass necessary consequential orders, suo motu, to give further directions in the matter as the situation may warrant . We are of the view that the Tribunal was bound in law to consider the alternative plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 May 1987, the revenue noticed that 'on-money' was charged by the assessee from its purchasers over and above the consideration disclosed in the agreements for sale. This was on the basis of statements of various employees of the assessee recorded during the course of the search. Though these statements were subsequently retracted by the concerned employees, in the course of proceedings under Section 132 (5) of the Act, the assessee itself came forward with a disclosure of ₹ 66 Lakhs 'onmoney', which was offered for taxation in the two assessment years, namely, 1987-88 and 1988-89, at ₹ 26 Lakhs and ₹ 40 Lakhs, respectively. This offer was purportedly on the basis that the assessee was following the project completion method of accounting and the project was said to be substantially completed during these two assessment years. 3. The Assessing officer did not accept the project completion method proposed by the assessee, and held, firstly, that 'on-money' should be assessed in every year in which the agreements for sale were made by the assessee. Secondly, he also did not accept the quantum of on-money offered to taxation and held that on-money should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeals (rejecting the project completion method adopted by the CIT(A) for the assessment years 1985-86 and 1988-89) and dismissed the assessee's appeals (upholding both the quantum as well as the method of accounting the 'on - money' for assessment years 1986-87 and 1987-88). At the same time, whilst doing so, the Tribunal did not grant any relief to the assessee on his alternative plea requiring the assessment of 'on- money' for the assessment years 1987-88 and 1988-89 on the normative basis worked out for the project instead of actual 'on-money' disclosed by the assessee for the two particular years. 6. The assessee thereafter filed a miscellaneous application under Section 254 of the Act pointing out that there was an excess addition on account of 'on-money'. The basis of the assessee's plea was the very same ground urged in the appeals, namely, that if the Tribunal were not to accept the assessee's case that 'on-money' of ₹ 26,00,000/and ₹ 40,00,000/should be added in the last two years, i.e. Assessment Years 1987-88 and 1988-89, on the basis of project completion method, the Tribunal could only take the normative 'on-money' (worked out for the whole project on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89, on the basis of project completion method. The department did not accept this case. The authorities below did not accept either the quantum of on money (i.e. ₹ 66,00,000/) or the method of accounting (i.e. project completion method) proposed by the assessee. Instead the authorities proceeded on a normative basis and concluded that the total on-money received in the project worked out to ₹ 1,25,78,000/. They spread this 'on - money' over all eight years on the basis of percentage completion method, the figures for Assessment Years 1987-88 and 1988-89 coming to ₹ 8,16,000/and ₹ 2,02,000/respectively. (The assessments for Assessment Years 1981-82 to Assessment Years 1986-87, were on the basis of the respective normative figures for these years, which were accepted by the assessee.) The question is, having done so, can the authorities disregard the normative figures (of ₹ 8,16,000/and ₹ 2,02,000/) for Assessment Years 1987-88 and 1988-89 and instead take ₹ 66,00,000/(i.e. ₹ 26,00,000/and ₹ 40,00,000/for Assessment Years 1987-88 and 1988-89) offered in the assessee's returns for the particular assessment years. 9. The answer l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Years 1981-82 to 1988-89 with corresponding figures for individual years (making up a total of ₹ 1,25,78,000/), the revenue cannot possibly hope to bring to tax the amount of ₹ 66,00,000/originally offered by the assessee in the last two years, i.e. Assessment Years 1987-88 and 1988-89. The normative figures for individual assessment years adding upto ₹ 1,25,78,000/must substitute ₹ 66,00,000/wholly. So substituted, the individual figures, according to the Tribunal itself, for Assessment Years 1987-88 and 1988-89 would work out ₹ 8,16,000/and ₹ 2,02,000/, respectively. If one were to add instead ₹ 26,00,000/and ₹ 40,00,000/the result would be that the total on-money would go up to ₹ 1,81,60,000/(i.e. ₹ 1,25,78,000/plus ₹ 66,00,000/less the total of ₹ 8,16,000 and ₹ 2,02,000). That would be an absurd result completely unintended by the department itself. The correct relief, if the department were to assess the assessee in the manner proposed, was to add the 'on-money' figures of ₹ 8,16,000/and ₹ 2,02,000/in Assessment Years 1987-88 and 1988-89 instead of ₹ 26,00,000 and ₹ 40,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, which had set up a new plant for manufacturing additional pharmaceutical goods. The assessee claimed this plant to be part of its existing business and on that footing claimed deduction of certain travelling expenses in connection with this plant as revenue expenditure. The assessing officer disallowed that claim on the ground that the expenditure was not incurred wholly and exclusively for its existing business. The CIT(A) allowed a part of the expenditure as revenue expenditure. The tribunal, however, affirmed the order of the assessing officer and held the entire expenditure to be capital expenditure. In a reference from that order, our Court upheld the tribunal's order. Having done so, it considered the further question, namely, whether the amount of expenditure (disallowed as revenue expenditure) should have been added to the "actual cost" of the plant and benefits allowed accordingly. The assessee's plea was that if the expenditure was held to be capital expenditure, suitable directions be given to the lower authorities to include the same in the cost of the asset and to allow the assessee the benefit of development rebate and depreciation accordingly. This alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him Emphasis, italicised inprint, supplied) In that view of the matter, we are of the clear opinion, that the Tribunal was not justified in refusing to consider the alternative submission of the assessee that, in the event the expenditure in question was held by it to be capital in nature, suitable direction should be given for allowing appropriate development rebate and depreciation as admissible under the law on such amount on the appeal that it was an additional ground raised by the assessee. In our opinion, it was the duty of the Tribunal even in the absence of alternate argument of the assessee to make such a direction suo motu. We, therefore, answer the second question in the negative and in favour of the assessee." 13. In the foregoing premises, we are of the view that the Tribunal was bound in law to consider the alternative plea raised by the assessee at the hearing of the appeals. The question now is, what relief should be granted on the applications before us. The miscellaneous applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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