9911796707
TMI Blog1988 (8) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... wo subsequent assessment years i.e. asst. yrs. 1979-80 and 1980-81. The ITO, in all the three years, allowed certain reliefs under s. 35B of the Act as per orders dt. 14th May, 1982. Thereafter, on 22nd April, 1985, the successor ITO was of the opinion that relief allowed to the assessee in respect of expenditure on "blending of tea", "packages for export of goods" as also "bank interest" did not fall under cl. (viii) of s. 35B(1)(b) of the Act, as these expenditures were incurred in India and, therefore, relief under s. 35B was wrongly allowed to the assessee. As per the successor ITO, the assessment for 1978-79 was to be completed in compliance with direction of CIT(A) to apply Special Bench decision of Tribunal in the case of J. Hemchand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on basis of decision of Tribunal in Tribunal No. 291 of 1970 dt. 26th May, 1980. Likewise, relief in respect of blending charges and expenses incurred on package material was allowed by the ITO after applying his mind. He further observed that orders for the asst. yrs. 1979-80 and 1980-81, were passed after directions under s. 144B of the Act were issued by the IAC. That apart, as per CIT(A) the points involved were arguable and, therefore, rectification, withdrawing relief under s. 35B of the Act already allowed to the assessee, was not a mistake apparent from record. On the issue involved, two opinions were possible. The CIT(A), accordingly, cancelled rectification orders in all the three assessment years. Hence these appeals by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee maintained that as far as asst. yrs. 1979-80 and 1980-81 were concerned there was no direction of CIT(A) to apply decision of J. Hemchand Co. and, therefore, relief under s. 35B was to be allowed in accordance with principle of law. He, therefore, pointed out that facts as far as two subsequent assessment years were concerned, were different and, therefore, the submission that in not applying principle of J. Hemchand Co. the ITO, committed rectifiable mistake under s. 154 of the Act was not tenable in these two years. For the asst. yr. 1978-79, CIT(A), as per his order dt. 23rd Sept., 1981, had set aside whole assessment with direction to make fresh assessment after considering principle laid down by Tribunal in the Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on similar circumstances upheld the order of CIT(A), cancelling rectification order under s. 154 withdrawing relief allowed to the assessee under s. 35B of the Act. The reference application under s. 256(1) against the above order was dismissed by the Tribunal and said order has been maintained by Hon'ble High Court under s. 256(2) of the Act as per decision dt. 19th July, 1988, in reference Matter No. 1874 of 1986. It was accordingly argued that orders of CIT(A) be affirmed. 6. We have carefully considered rival contentions of the parties as also facts, material on record and case-laws cited at the bar. As per order dt. 23rd Sept., 1981 in asst. yr. 1978-79, the CIT(A) had directed the ITO to make fresh assessment in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of Special Bench decision held that relief under s. 35B(1)(b)(viii) was wrongly allowed as expenditure were incurred in India. After observing "whether a particular claim raised by an assessee falls under one or more of the activities specified in those sub-clauses can best be judged only with reference to the facts of particular case and the nature of claim made", the Special Bench of J.H. Co. had also concluded as under: "(vi) Except for the purpose of sub-cl. (iii), the place where the expenditure is incurred is irrelevant. In other words, any expenditure satisfying the conditions laid down in sub-cl.(i) and (iv) to (viii) will get the benefit of weighted allowance irrespective of whether the same is incurred in or outside Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sors. In this case it is not claimed that any material fact or provision of law was overlooked by the ITO while allowing relief in order dt. 14th May, 1982. In fact, the ITO was fully conscious of provisions and had allowed relief to the assessee after full discussion and elaboration. The successor ITO simply sought to substitute his own better judgment on review of the matter. This in our considered view was much beyond what is permissible under s. 154 of the Act having limited scope. Similar view taken by Tribunal in Kanoria Chemical and Industries Ltd. has already been approved by Hon'ble High Court by dismissing reference application under s. 256(2) of IT Act. In above view of the matter, the decision of CIT(A) cancelling the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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