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TMI Blog1981 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... nexed hereto. Such costs shall be payable half-yearly, in arrear, in sterling in London and shall become due for payment on receipt by the company of Burmah's debit notes for such costs. " Originally, a return was filed on September 28, 1970, showing a total income of Rs. 9,08,35,318. Subsequently, a revised return was filed on January 3, 1973, showing a total income of Rs. 9,48,17,590. During the assessment, the ITO passed the order as follows: "The assessee has claimed deduction of Rs. 61,565 being guarantee-commission for purchase of Gas Compressor. Similar claim for guarantee commission made in 1969-70 has been disallowed as of a capital nature. As the circumstances are similar, the amount will be disallowed. London office charges paid to the Burmah Oil Co. are being allowed in the earlier assessments with reference to bills issued by that party. Thus, for the assessment year 1969-70, the charges relating to the second half of 1967 and first half of 1968 have been allowed and the claim for deduction relating to the second half of 1968 has been disallowed. On the same basis, the charges for the second half of 1968 and the first half of 1969 will be allowed in this curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ITO was not consistent with the manner in which the assessee was debiting the service charges in its own accounts. The assessee also would not stand to lose by the basis adopted by the ITO in allowing the deduction because the service charges relatable to the second half year of 1969 which were not allowed as a deduction in the assessment for the assessment year 1970-71, would naturally be allowed as a deduction in the assessment for the assessment year 1971-72. As a result of the action of the AAC, the assessee had a double benefit, i.e., the benefit of deduction of the service charges relatable to the second half year of 1968, which the ITO himself allowed, following the departmental practice of allowing deduction of service charges in the year of receipt of the debit notes by the assessee-company from the Burmah Oil Co. Ltd., and also the benefit of deduction of the service charges relatable to the second half year of 1969 being allowed on the basis of what was claimed to be the correct legal position, principles of accountancy and the manner of maintenance of accounts by the assessee-company. If the-claim of the assessee for the allowance of service charges on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was contended that the said allowance was not the subject-matter of the appeal before the Tribunal and the Tribunal should not, therefore, adjudicate upon it. It is also pointed that if the Tribunal were to withdraw the allowance, the assessee would be hard put to it, since it would not be possible for the assessee at this stage to get those service charges allowed as deduction in the assessment for the assessment year 1969-70, which was already completed. All the assessments completed in the past would be upset, if the service charges relatable to the second half year of 1968 were directed to be allowed as deduction in the assessment of an earlier year, which was already completed without the same being allowed. The service charges in respect of the second half year of 1968 were not allowed as a deduction in the assessment of any other year, and there was, therefore, no question of the same deduction being allowed twice over. On a careful consideration of the rival contentions, the Tribunal recorded the following finding in para. 8 of the order: " We have carefully considered the rival contentions advanced by both the sides. While we agree with the interpretation put upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, 1961, powers have been conferred on the Tribunal which are very wide and extensive. The Tribunal can " pass such orders thereon as it thinks fit ". The word " thereon " restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. Mr. Kalyan Roy, the learned advocate for the assessee draws our attention to the decision of Chief justice Chagla in the case of Indira Balakrishna v. CIT [1956] 30 ITR 320 (Bom). At page 327 of the report, Chief Justice Chagla gives out a caution in the following lines: "It must try and confine itself to the question that really arises in the appeal before it and not travel outside the ambit of its jurisdiction and express opinions prejudicial to the assessee which may help the department in taking proceedings against the assessee ........" Our attention was also drawn to the decision of the Allahabad High Court in the case of Kanpur Industrial Works v. CIT [1966] 59 ITR 407 (All). In this case, the department filed an appeal for an increase in the assessed income, the subject-matter of the appeal was the increase claimed by the department and in such a case the assessee could urge any ground of defence, even though i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee from the Kano firm was derived from business controlled in India. (ii) The Tribunal's direction was not consequential to a change in the firm's assessment. It was clear that, had not the assessee filed his appeal before the Tribunal, his position would have been better off than what it became as a result of the Tribunal's direction. The direction was to assess the assessee as an individual and add to his income his share of profits which could be done only by proceedings taken under s. 34. The direction given by the Tribunal was, therefore, without justification. As to the jurisdiction of the Tribunal in dealing with an appeal pending before it, the Mysore High Court in the case of Pathikonda Balasubba Setty v. CIT [1967] 65 ITR 252 (Mys) held that the powers of the Tribunal are limited to the subject-matter of the appeal ; that the Tribunal had no power to make an enhancement beyond the figure fixed by the officer and that the Tribunal could only deal with the two additions relating to the gross profit but not with the other addition relating to unexplained stock and hence had no jurisdiction to set aside the entire order of the AAC. In completing the assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was as follows: " That, on the facts and in the circumstances of the case, the learned AAC erred in holding that the assessee was entitled to the amount of Rs. 2,93,623 as a deduction on account of services charged during the year." The Tribunal did not accept the appeal preferred by the department. The Tribunal had held that the balance of Rs. 93,623 as reduced by Rs. 1,43,224 was obviously a wrong addition and was rightly deleted by the AAC. According to Mr. Roy, the Tribunal had no jurisdiction to delete this addition made by the AAC. According to him, the scope of the appeal was limited to the finding whether the assessee was entitled to the amount of Rs. 2,93,623 as deduction. It is also argued by him that it is not open to the Tribunal to come to a finding adverse to the assessee which does not arise from any question raised in the appeal, nor is it open to it to raise any ground which would work adversely to the assessee and pass an order which would make its position worse than it was under the order appealed against. Mr. Subash Sen, learned counsel for the revenue, at once points out that the argument of Mr. Roy would hold good had the assessee been the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the decision of the Gujarat High Court in F. Y. Khambhaty v. CIT [1966] 61 ITR 30 (Guj), to which we have already made reference earlier. Our attention is also drawn to the decision of the Supreme Court in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC). In this case, the assessee, a company incorporated in the Native State of Indore, was assessed in British India (except for the assessment year 1948-49) as a non-resident on such income as fell within s. 4(1)(a) or (c) read with s. 42 of the Indian I.T. Act, 1922. After the Constitution of India came into force, Indore became a Part State and the Indian I.T. Act, 1922, was brought into force in Part States with effect from April 1, 1950. From the assessment year 1950-51, the assessee became assessable as a resident. For the assessment years 1950-51 to 1952-53, one of the questions that arose for determination was the proper written down value of its building, machinery, etc. for calculating the depreciation allowance under s. 10(2)(vi) of the Act. The Tribunal held that only that part of the depreciation which entered into the computation of the taxable income of the assessee under the Act for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the determination of questions raised before the departmental authorities. All questions, whether of law or of facts which related to the assessment of the assessee might be raised before the Tribunal. If for reasons recorded by the departmental authorities in respect of a contention raised by the assessee, grant of relief to him on another ground was justified, it would be open 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 was not restricted to the relief raised by him. In this case, the assessee claimed development rebate on the ground that introduction of the "Casablanca conversion system" involved installation of new machinery and for the first time before the Appellate Tribunal claimed in the alternative that the amount laid out was in any event expenditure for current repairs allowable under s. 10(2)(v) of the Indian I.T. Act, 1922. It was held that because the Tribunal rejected the assessee's claim for development rebate it was not open to disallow the claim of the assessee for an allowance of the amount spent, if it was a permissible allowance on another ground. Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rger amount than was demanded at the stage of assessment, the Tribunal would have jurisdiction to consider such a plea. The Tribunal had, however, the discretion not to admit any fresh plea being put forward when it would involve an investigation of facts. An assessee could put forward a claim for a larger deduction which he had not urged before the lower authorities and it would be open to the Tribunal as the final fact-finding authority to consider such a claim. According to Mr. Sen, the scope of the enquiry before the Tribunal was whether, on the facts and in the circumstances of the case, the AAC erred in holding that the assessee was entitled to the amount of Rs. 2,93,623 as a deduction on account of service charges during the year. The Tribunal appears to have heard both the parties at length in deciding the point at issue. It is found by the Tribunal that the liability in respect of the service charges for the second half of 1969 arose out of the debit note dated December 31, 1969, and was definitely to be treated as a liability for the calendar year 1969. Clause 7 of the agreement emphasised by the departmental representative does not shift the accrual to later date but onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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