9911796707
TMI Blog1978 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... t years:- Assessment year : 1973-74 ".........During the accounting period, assessee has incurred Rs. 1,06,274 towards scientific research expenses. The assessee has produced sufficient evidence that it is engaged in scientific research activities and that it has actually incurred these expenses. Those expenses will, therefore, be allowed......." Assessment year : 1974-75 "........Like last year, the assessee will be allowed to deduct capital expenditure on scientific activities......." Assessment year : 1975-76 (No discussion. Since this assessment order was passed on the same day as the assessment order for the assessment year 1974-75. The reasons for the allowance of capital expenditure of scientific research activities in this year is the same as in the assessment order for assessment year 1974-75). To put in other words, the Income Tax Officer, for the said claims of the assessee for the said years, has adopted the above reasoning given by him in the assessment order of the assessee for the accounting period relevant to the assessment year 1973-74. 3. Later on, the Commissioner of Income Tax, being of the opinion that "......the expenditure has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excess of 50 per cent were not to be allowed for the purposes of s. 35(1) (iv) of the Income-tax Act, 1961, the assessments for the years under consideration were erroneous insofar as they were prejudicial to the interests of the Revenue, inasmuch as the full claim had been allowed for those years by the Income-tax Officer, and that, the extent of 50 per cent the assessee was not eligible to the concession provided for under s. 35 of the Act. Thereafter, the Commissioner of Income-tax, by observing as under, has directed the Income-tax Officer to make fresh assessments for the years under consideration, in accordance with law, after giving full opportunity to it (the assessee): "....However, since I am not going into each item of expenditure incurred by the assessee company and claimed by it as being eligible to the rebate under s. 35 (1)(iv), it is only fair in the interest of the assessee company and the Revenue that the assessment is set aside so that the ITO can go through each item of expenditure claimed and examine whether it relates to the research and development activities or wholly and exclusively for business purposes. Thereafter, the ITO can limit the claim under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on the facts and in the circumstances of the case, more so, in view of the decision of the prescribed authority under s. 35(3) of the Act in the case of the assessee for the accounting period relevant to the assessment year 1972-73. He, further relying on the decision of the Delhi High Court in Gee-Vee Enterprises vs. Additional Commissioner of Income-tax (3), has argued that the Commissioner of Income Tax was competent in law to pass the order in question. It was not necessary for the Commissioner of Income Tax to make further enquires before cancelling the assessment orders of the Income-tax Officer. The Commissioner of Income Tax would regard the assessment orders as erroneous on the ground that in the circumstances of the case, the Income-tax Officer should have made further enquiries before accepting the statements made by the assessee before him. The circumstances of the case would have made the enquiries prudent in the present case. The Commissioner of Income Tax could, on the facts and in the circumstances of the case, pass the impugned order, as the assessment was erroneous and prejudicial to the interests of the Revenue. 6. We have given consideration to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer had no jurisdiction to adjudicate upon the controversy, particularly when the controversy and already been referred to the prescribed authority......" Their Lordships of the Allahabad High Court at page 886, after referring to the decision of the Madras High Court in the case of S.V. Adityan (50 ITR 463), have reiterated once again the above view in the following terms:- "........The same is true about the prescribed authority. It has been given the power to decide a question arising with regard to the admissibility of deduction under s. 85, in case the Income-tax Officer does not accept the assessee's claim....." 8. From the said decision of that Allahabad High Court, it is thus clear that the question of making a reference by the Income-tax Officer under s. 35(3) of the Act to the Central Board of Direct taxes, which, in turn, has make a reference to the prescribed authority, arises only if the Income-tax Officer does not accept the claim of the assessee under s. 35. In case there is no controversy in the matter of allowability of the claim of the assessee under s.35(1)(iv) of the Act, as in the present case, between the Income-tax Officer and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration passed by the Income-tax Officer were erroneous, insofar as they were prejudicial to the interest of the Revenue, were bad in the eyes of law. On that very ground the operative part of the impugned order of the Commissioner of Income Tax to the following effect is bad in the eyes of law:- "Until contrary decision was given by any other competent High Court, which was binding on a Tribunal in the State of Bombay, it had to proceed on the footing that law declared by the High Court, though of another State, was a final law of the land. When the Tribunal set aside the order of penalty, it did not go into the question of constitutionality of s. 140A(3). That section was already declared ultravires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country had to respect the law laid down by the High Court, though of a different State, so long as there was no contrary decision of any other High Court on that question." 10. Since the said decision of the Allahabad High Court is the only decision in the matter of interpretation to be given to the provisions of the s. 35(3) of the Act, the said decision, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
