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TMI Blog1985 (2) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate order and that the appellate order suffered from certain patent mistakes, the said Bench, vide its order dated 29-3-1982, recalled the appellate order and directed the office to refix the appeal for hearing and for disposal afresh. When the appeal next came up for hearing, the Bench felt that the issues raised in the appeal are interesting and important and that it would be in the fitness of things, if the appeal was heard by a Special Bench. Reference was made to the President for constituting a Special Bench to dispose of the appeal. The proposal having been accepted, the appeal has come up for hearing before this Special Bench. 2. Shri Bagchi, the learned standing counsel, has appeared for the department. He raised a preliminary objection to the hearing of the appeal by the Special Bench. He contended that the Tribunal does not have the power to review its order. The appeal was finally disposed by the Calcutta Bench of the Tribunal vide appellate order dated 18-9-1981. The appellate order was not challenged by the assessee either by filing a reference application or by way of writ in the High Court. It only filed a miscellaneous application and that too on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its appreciation of facts and understanding of the legal provisions. An aggrieved party can challenge such an order by filing a reference application or by invoking writ jurisdiction of the High Court or may be even by filing another miscellaneous application before the Tribunal itself for withdrawing the recalling order passed under section 254(2). To challenge the validity of such an order by raising a preliminary objection before the Special Bench in subsequent proceedings arising out of that order, is certainly not permissible because consideration of the preliminary objection in these proceedings will undoubtedly amount to reviewing the order. The preliminary objection is, therefore, rejected. 5. The only ground in this appeal is : " That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in his finding that provisions of section 44C were not applicable in the instant case and in that view in directing the Assessing Officer to recompute the total income by excluding disallowance made under section 44C of the Income-tax Act, 1961. " 6. The assessee is a non-resident (sterling) company. Its registered office is in London (UK). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s its entire business, i.e., cultivation, manufacture and sale of tea was in India and that its affairs in UK, where the assessee had its registered office only, were looked after by WDG, its secretaries and managing agents. It was submitted that the provisions of section 44C are applicable in cases where an assessee has business in a number of countries. Reference was made to the notes on clauses relating to the provisions in the Finance Bill, 1976, through which section 44C was introduced in the Act. The Commissioner (Appeals) has accepted the assessee's submissions and has directed the IAC to recompute the total income by excluding disallowance made by him under section 44C. 9. Shri Bagchi, the learned standing counsel for the department, and Dr. Pal, the learned counsel for the assessee, advanced learned and detailed arguments. For the sake of brevity, it is proposed to deal with them in the course of the order. In order to appreciate the rival contentions, it is desirable to refer to section 44C, to the extent it is relevant for the purpose of this appeal : " Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of section 45 of the Act as no cost of it can at all be conceived and section 48 of the Act, which provides for computation of income under the head 'Capital gains', inter alia, contemplates deduction of cost of acquisition of the capital asset. The ratio of the decision is that the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. In view of the above observations of the Supreme Court, we are inclined to hold that if any one or more of the computations under clause (a), (b) or (c) of section 44C is not conceivable in a particular case, it will have to be held that non obstante provisions contemplating disallowance of 'head office expenditure' under section 44C does not apply. 10. With this end in view, we now concentrate on clause (c) which, it is stated, does not apply in the case before us. The clause, admittedly, uses the expression "the amount of so much of the expenditure... as is attributable to the business... in India". The question is what does this expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purport and scope of the section. In this context, it is desirable to refer to the following observations of the Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 : " ...It is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and the purpose for which the legislation was enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible... ... The rule of construction by reference to contemporanea expositio is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced. There was a possibility of the non-resident assessee's claiming inflated expenditure attributable to business in India ; but there was no effective method to verify the claim. It was to get over these difficulties that a ceiling was provided for the expenditure in the nature of 'head office expenditure'. Accordingly, we hold that the section does not apply in the assessee's case. There is no necessity for a special provision as in such a case the claim for expenditure in the nature of head office expenditure for allowance or disallowance can be considered under section 37 itself without any difficulty. 12. In the view we have taken, strictly speaking, it is not necessary to consider the alternative claim of the assessee. Since, however, detailed arguments were advanced before the Special Bench, we have considered it desirable to consider and adjudicate alternative contention as well. Definition of 'head office expenditure', as given in Explanation (iv) to section 44C, has already been quoted in para 9 of the order. It means 'executive and general administration expenditure'. Expenditure on sales cannot certainly fall in the above category. A major portion of the so-cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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