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TMI Blog1976 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject-matter for consideration by the AAC, as the same were not the subject-matter of consideration before the ITO ? " The short facts which have given rise to the above question are as follows : The assessee is a resident individual whose income mainly consists of income from the business of bus transport in India and a half share income from the non-resident firm of Pussethanna Estate, Gombola, Ceylon, which owns certain tea estates. No assessment has been made in India on the said foreign firm. The assessee maintained an account called " Estate and Properties Account ". For the assessment years 1966-67 and 1967-68, the said account showed the following amount as received by subsidy and expenses : ---------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as subsidy. The department preferred an appeal against the order of the AAC to the ITA Tribunal. Before the Tribunal it was not the contention of the department that the expenditure of Rs. 22,888 and Rs. 37,281 was not admissible being capital expenditure, but its contention was that the two sums should be reduced by Rs. 15,000 and Rs. 21,605, respectively. The ITA Tribunal found that the ITO had not considered at the stage of assessments, whether any income referable to receipts from subsidy from the Ceylon Government was taxable or not and in particular whether the quantum of the expenditure of Rs. 22,888 and Rs. 37,281 would require to be reduced by any such income; that in the grounds of appeal before the AAC and in the course of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it could be considered to be in the nature of income or not." Thus, it will be seen from the perusal of the order of the Tribunal that the Tribunal dismissed the appeal of the department on two alternative grounds, namely, (1) the controversy could not be gone into by the Tribunal because the same was not the subject-matter of appeal before the AAC (2) there was no material on record to determine the exact nature of the subsidy and whether it could be considered to be in the nature of income or not. It is the correctness of this conclusion of the Tribunal that is challenged in the form of the question extracted above. In view of one feature present in this case, we consider that the question actually referred to this court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned standing counsel for the department contended before us that the assessee himself took the subsidy only as in the nature of income. For this purpose, he relied on the following passage occurring in the order of the ITO relating to the assessment year 1966-67 : " It was contended on behalf of the assessee that this (expenditure) should be allowed as revenue expenditure, as the assessee is deriving subsidy from the tea control department of Ceylon ". From this alone no inference could be drawn that the assessee conceded that the subsidy had the character of income. As a matter of fact, this contention was put forward before the Tribunal itself and the Tribunal rejected the same in the following terms : " It was urged by Shri Rama ..... X X X X Extracts X X X X X X X X Extracts X X X X
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