GREAVES LTD ( NOW KNOWN AS GREAVES COTTON LTD), MUMBAI V. DCIT SP. RG 17, MUMBAI

ITA 5733/MUM/2009

• Counselvise Citation: 573319914 RSA 2009
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 28-07-2010
• Assessment Year: 1994-1995
• Appeal Filed On: 27-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PAWAN VED
• Keywords: Question of law; Assessment record; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SMT ASHA VIJAYRAGHVAN (JUDICIAL MEMBER) ITA NO. : 5733/ MUM/2009 ASSESSMENT YEAR: 1994-95 GREAVES LIMITED ..APPELLANT (NOW KNOWN AS GREAVES COTTON LIMITED) INDUSTRY MANOR, APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI 400 025 PAN : AAACG 2062 M VS. DY.COMMISSIONER OF INCOME TAX, SPECIAL RANGE-17 ..RESPONDEN T MUMBAI 400 020 APPEARANCES: AARATI VISSANJI, FOR THE APPELLANT PAWAN VED, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 25 TH AUGUST 2009, IN THE MATTER OF GIVING EFFECT TO THE APPELLATE ORDER DEALING WITH ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR1994-95. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE CIT (A) SHOULD HAVE DEALT WITH THE GROUND REFERRED TO BY THE ITAT AND THE RECTIFICATION APPLICATION SUBMITTED BY THE APPELLANT AND ALLOWED SET OFF OF CARRIED FORWARD LONG TERM CAPITAL LOSS AGAINST SHORT TERM C APITAL GAINS INSTEAD OF UPHOLDING THE ORDER OF THE AO SETTING OFF THE CA RRIED FORWARD LONG TERM CAPITAL LOSS AGAINST LONG TERM CAPITAL GAINS O F THE ASSESSMENT YEAR 1994-05. 3. THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. IN T HE FIRST ROUND OF PROCEEDINGS, AND WHILE CHALLENGING CORRECTNESS OF CIT(A)S ORDER DATED 5 TH SEPTEMBER 2002, ONE OF THE GRIEVANCES RAISED BY THE ASSESSEE WAS AS FOL LOWS:- H: CAPITAL GAINS RS 7,28,95,320 THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAVE OMITTED TO DEAL WITH THE GROUND AND SHOULD HAVE ALLOWED THE CA PITAL GAINS CHARGED TO TAX AS LONG TERM CAPITAL GAINS INSTEAD OF CHARG ING AS SHORT TERM CAPITAL GAINS, THOUGH THE APPELLANT, INADVERTENTLY, IN THE RETURN OF INCOME DECLARED THE SAME AS SHORT TERM CAPITAL GAIN S, IN VIEW OF FACTS AVAILABLE ON RECORD. WITHOUT PREJUDICE TO ABOVE, THE CIT(A) SHOULD HAVE ALLOWED SET OFF OF CARRIED FORWARD LONG TERM CAPITAL GAINS OF RS 4,61, 35,148 AGAINST THE SHORT TERM CAPITAL GAIN OF RS 7,28,95,320 OF THE AP PELLANT, AS PER PROVISIONS OF SECTION 74 OF THE INCOME TAX ACT, 196 1. 4. A CO ORDINATE BENCH OF THIS TRIBUNAL, WHILE DEAL ING WITH THE ABOVE GROUND OF APPEAL AS ALSO GROUND OF APPEAL J REGARDING DEDUCTI ON UNDER SECTION 80 IA, REMITTED THE MATTER TO THE FILE OF THE CIT(A) BY OBSERVING T HAT LEARNED REPRESENTATIVES AGREE THAT THESE ISSUES HAVE NOT BEEN DEALT WITH BY THE C IT(A), EVEN THOUGH SPECIFIC GROUNDS OF APPEAL WERE TAKEN BEFORE HIM, BOTH OF TH ESE ISSUES ARE REQUIRED TO BE RESTORED TO THE FILE OF THE CIT(A) FOR ADJUDICATION ON MERITS. HOWEVER, WHILE REPRODUCING THE GROUND OF APPEAL, IT APPEARS THAT T HERE WAS A TYPOGRAPHICAL ERROR INASMUCH AS THE PARAGRAPH STARTING WITH WITHOUT PR EJUDICE TO ABOVE. WAS NOT REPRODUCED IN THE TRIBUNAL ORDER. WHILE SO ADJUDIC ATING THE MATTER IN REMANDED PROCEEDINGS, THE CIT(A) DECLINED TO DEAL WITH THIS LIMB OF ASSESSEES GROUND AS ALSO ASSESSEES PLEA REGARDING CORRECT DATE OF RELEVANT DATES, AND CIT(A)S JUSTIFICATION FOR THIS INACTION WAS THAT THE ASSESSEE ITSELF HAD OFFERED THE CAPITAL GAINS TO TAX AS SHORT TERM CAPITAL GAIN AND SINCE THE ASSESSEE HAS NEVER RAISED THE ISSUE BEFORE THE ASSESSING OFFICER TILL THE COMPLETION OF ASSESS MENT, THEREFORE, THE CONTENTION OF I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 3 THE ASSESSEE FOR CONSIDERING THE DATE OF ALLOTMENT DATED 22.01.1994 AS DATE OF SALE OF SHARES CANNOT BE CONSIDERED AT THIS STAGE. LEA RNED CIT(A) ALSO REFERRED TO, AND RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF GOETZE INDIA LIMITED VS CIT (284 ITR 323), IN SUPPORT OF THE PR OPOSITION THAT A NEW CLAIM MADE BY THE ASSESSEE, OTHERWISE THAN BY WAY OF A REVISED RETURN, COULD NOT HAVE BEEN ENTERTAINED BY THE ASSESSING OFFICER. THE CIT(A) F URTHER NOTED THAT WHATEVER ISSUE WAS REMITTED BY THE TRIBUNAL TO THE FILE OF THE CIT (A) HAS BEEN DEALT WITH, AND THAT THE ALTERNATE PLEA ( I.E. PARAGRAPH BEGINNING WITH WITHOUT PREJUDICE TO ABOVE) WAS NOT ANYWAY REMITTED TO THE FILE OF THE CIT(A) BY TH E TRIBUNAL. THE ASSESSEE IS AGGRIEVED OF THE STAND SO TAKEN BY THE CIT(A) AND I S IN APPEAL BEFORE US. THE ASSESSEE SEEKS A DIRECTION THAT THE CIT(A) SHOULD B E DIRECTED TO DEAL WITH, AND ADJUDICATE ON, THE ALTERNATE PLEA AS WELL. 5. HAVING HEARD THE RIVAL SUBMISSIONS, AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE UNABLE TO SUSTAIN HYPER TECHNICAL PL EA OF THE CIT(A). WE HAVE NOTED THAT WHAT WAS REMITTED TO THE FILE OF THE CIT(A) WA S GROUND NO. 8 FOR ADJUDICATION ON MERITS, AND THIS GROUND OF APPEAL, TERMED AS GROUND H IN THE MEMORANDUM OF APPEAL, CLEARLY INCLUDED THE ALTERNATIVE PLEA AS EVIDENT FROM THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL, AS SET OUT IN FORM # 36. THE M ISTAKE IN NOT TYPING OUT THE COMPLETE GROUND OF APPEAL IS AN INADVERTENT TYPOGRA PHICAL ERROR, AND MERELY BECAUSE ALTERNATE PLEA IS NOT SET OUT IN THE SAME, THE ALTERNATE PLEA, ADMITTEDLY A PART OF GROUND H, CANNOT BE SIMPLY BRUSHED ASIDE. IN ANY EVENT, EVEN IF WE ARE TO PROCEED ON THE BASIS THAT THIS ISSUE HAS BEEN TAKEN UP BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL, IN OUR CONSIDERED VIEW, T HERE IS NO BAR ON OUR ADMITTING THIS GRIEVANCE AND REMITTING THE MATTER FOR FRESH ADJUDI CATION BY CIT(A). 6. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, DO ES NOT SHARE THAT PERCEPTION. HE VEHEMENTLY OPPOSES THE SUGGESTION TH AT THIS LEGAL PLEA CAN BE ADMITTED EVEN AT THIS STAGE . IT IS HIS CONTENTION THAT THE ASSESSEE CAN NOT BE ALLOWED TO RAISE THIS NEW PLEA AT THIS STAGE, BECAU SE THE ASSESSEE HAD NOT MADE THIS CLAIM AT THE TIME OF FILING THE RETURN OF INCO ME. RELYING UPON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF MOTIBHAI FULABHAI P ATEL & CO VS COLLECTOR OF CENTRAL EXCISE (AIR 1979 SC 829), IT IS SUBMITTED THAT NO PERSON CAN BE PERMITTED TO BENEFIT BY HIS WRONGFUL ACT AND THAT NO RULE OF L AW SHOULD BE SO INTERPRETED SO AS TO I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 4 ENCOURAGE ITS CIRCUMVENTION. IT IS CONTENDED THAT ALLOWING A TAXPAYER TO RAISE A NEW PLEA AT THIS STAGE ALLOWS HIM TO TAKE BENEFIT O F HIS OWN MISTAKE OF NOT MAKING THE CLAIM BY WAY OF AN INCOME TAX RETURN. IT IS SUB MITTED THAT THE LAW PROVIDES FOR FILING OF AN INCOME TAX RETURN, AND A TIME FRAME IS PERMITTED TO REVISE THE INCOME TAX RETURN. IN CASE TAXPAYER IS ALLOWED TO MAKE THE CLA IM AT ANY STAGE, THE TIME LIMIT FOR REVISING THE INCOME TAX RETURN WILL BE RENDERED RED UNDANT. LEARNED DEPARTMENTAL REPRESENTATIVE THEN INVITES OUR ATTENTION TO THE A MENDMENT IN SECTION 143(2) BY DIRECT TAX LAW AMENDMENT ACT 1987. IT IS POINTED O UT THAT AS AGAINST AN ASSESSMENT UNDER SECTION 143(2) BEING RESORTED TO F OR DETERMINATION OF CORRECT TAXABLE INCOME PRIOR TO THIS AMENDMENT, THE ASSESSM ENT IS NOW DONE ONLY TO ENSURE THAT ASSESSEE HAS NOT UNDERSTATED HIS INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDERPAID THE TAX LIABILITY IN ANY MANNE R. THE OBJECTIVE OF THE ASSESSMENT IS THUS ONLY TO PROTECT INTERESTS OF THE REVENUE, A ND IT IS WRONG TO PROCEED ON THE BASIS THAT POST THIS AMENDMENT, THE OBJECTIVE OF AS SESSMENT IS TO COMPUTE CORRECT INCOME OR PROTECT THE INTERESTS OF TAXPAYER IN ANY MANNER. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT IN VIEW OF THIS PARADIG M SHIFT IN THE SCHEME OF THE ASSESSMENT, HONBLE SUPREME COURT JUDGMENT IN THE C ASE OF NATIONAL THERMAL POWER CO. LTD VS CIT (229 ITR 383) CANNOT BE PUT I NTO SERVICE FOR ADMISSION OF ADDITIONAL GROUND OF APPEAL BY THE ASSESSEE, THOUGH IT WILL, ACCORDING TO HIM, CONTINUE TO HOLD GOOD SO FAR AS ADDITIONAL GROUNDS OF APPEAL BY THE ASSESSING OFFICER IS CONCERNED. IN ANY EVENT, ACCORDING TO TH E LEARNED DEPARTMENTAL REPRESENTATIVE, HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF NTPC (SUPRA) IS NOT GOOD LAW BECAUSE IT DOES NOT TAKE INTO ACCOUNT EARLIER JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS GURJARGRAVURE S PVT LTD (111 ITR 1) WHEREIN THEIR LORDSHIPS HAD HELD THAT WHEN ASSESSEE HAS NOT MADE CLAIM BEFORE THE ITO, THE SAME COULD NOT HAVE BEEN MADE BEFORE TRIBUNAL E ITHER. WHEN IT IS POINTED OUT TO THE LEARNED DR THAT NTPC JUDGMENT IS BY A THREE JUD GE BENCH, WHEREAS GURJARGRAVURES JUDGMENT IS BY A TWO JUDGE BENCH, TH E GURJARGRAVURES JUDGMENT DID NOT REALLY CONSTITUTE A BINDING PRECEDENT FOR HONB LE COURT IN NTPCS CASE, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE VERY F ACT THAT THIS DECISION WAS NOT CONSIDERED IN NTPCS CASE TAKES AWAY BINDING NATURE OF NTPC JUDGMENT. IT IS FURTHER CONTENDED THAT IN ANY EVENT, EVEN ACCORDING TO THE NTPC JUDGMENT, AN ADDITIONAL GROUND CAN ONLY BE ADMITTED WHEN ALL THE RELEVANT MATERIAL FACTS ARE ALREADY ON RECORD, WHEREAS IN THE CASES BEFORE US, ADDITIONAL FACTS ARE REQUIRED TO I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 5 BE ASCERTAINED. WE ARE THUS URGED TO REJECT THE ADD ITIONAL GROUNDS OF APPEAL AS NOT MAINTAINABLE. LEARNED COUNSEL SUBMITS THAT IT IS N OT A QUESTION OF ADMITTING THE ADDITIONAL GROUND OF APPEAL, BUT THE IMPACT OF THE GRIEVANCE HAVING BEEN REMITTED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. IT I S SUBMITTED THAT A TYPOGRAPHICAL MISTAKE CANNOT BE SO INTERPRETED AS DILUTE OR CURTA IL THE DIRECTIONS OF THE TRIBUNAL, AND THAT IT IS NOT EVEN IN DISPUTE THAT GROUND H RA ISED BY THE ASSESSEE BEFORE THE TRIBUNAL DID INDEED CONTAIN THE ALTERNATIVE PLEA. L EARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ALL THE RELEVANT FACTS ARE ALREADY ON RECORD AND NO FURTHER INVESTIGATION OF FACTS IS REQUIRED. IT IS THEN SUBMITTED THAT THE LAW LAID DOWN BY HONBLE SUPREME COURT IN NTPCS CASE IS FREE OF ANY AMBIGUITY OR DO UBT. UNDOUBTEDLY, WHILE DISCRETION OF ADMITTING AN ADDITIONAL GROUND OF APP EAL IS WITH THE TRIBUNAL, THEIR LORDSHIPS HAVE MADE IT CLEAR THAT THE POWERS OF THE TRIBUNAL ARE NOT CONFINED ONLY TO THE ISSUES ARISING OUT OF THE CIT(A)S ORDER AND TH E TRIBUNAL IS AT LIBERTY TO DEAL WITH ANY OF THE ISSUES RELATING TO THE ASSESSMENT EVEN T HOUGH THE SAME IS NOT RAISED BEFORE THE ASSESSING OFFICER. AS FOR THE PARADIGM S HIFT SAID TO HAVE BEEN BROUGHT BY 1987 AMENDMENT TO SECTION 143(2), LEARNED COUNSEL S UBMITS THAT WHATEVER BE THE GROUND ON WHICH A CASE IS SELECTED FOR SCRUTINY ASS ESSMENT, SUCH A NARROW INTERPRETATION TO THE SCOPE OF EXERCISE UNDER SECTI ON 143(2) CANNOT BE SUSTAINED IN LAW. SHE SUBMITS THAT THE OBJECTIVE OF THE ASSESSME NT PROCEEDINGS IS TO ARRIVE AT THE CORRECT INCOME AND CORRECT TAX LIABILITY, AND AS LO NG AS PROCEEDINGS BEFORE THE TRIBUNAL ARE ON, ASSESSEE CAN INDEED TAKE UP ANY IS SUE WHICH HAS INFLUENCE ON DETERMINATION OF CORRECT INCOME TAX LIABILITY. IT IS SUBMITTED THAT THE TRIBUNALS POWERS OF ADMITTING ADDITIONAL GROUND OF APPEAL EVE N IF IT BE CO CONSIDERED, ARE WIDE AND UNFETTERED. 7. WE ARE UNABLE TO SEE LEGALLY SUSTAINABLE MERITS IN THE STAND OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. HIS PERCEPTIONS ABOUT PARADIGM SHIFT, SAID TO HAVE BEEN INTRODUCED BY DIRECT TAXES LAW (AMENDMENT) AC T IN SECTION 143(2), ARE CLEARLY ILL CONCEIVED. SECTION 143(2), AS IT STOO D PRIOR TO THE SAID AMENDMENT AND AFTER THE SAID AMENDMENT, ARE AS FOLLOWS: PRIOR TO 1.4. 89 [I.E. PRE DIRECT TAX (AMENDMENT) A CT 1987 AMENDMENT] 143 (2) WHEN A RETURN HAS BEEN FILED UNDER SECTION 139, AND I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 6 (A) AN ASSESSMENT HAVING BEEN MADE UNDER SUB-SECTIO N (1), THE ASSESSEE MAKES WITHIN ONE MONTH FROM THE DATE OF SERVICE OF THE NO TICE OF DEMAND ISSUED IN CONSEQUENCE OF SUCH ASSESSMENT, AN APPLICATION TO T HE ASSESSING OFFICER OBJECTING TO THE ASSESSMENT, OR (B) WHETHER OR NOT AN ASSESSMENT HAS BEEN MADE UNDE R SUB-SECTION (1), THE ASSESSING OFFICER CONSIDERS IT NECESSARY OR EXPEDIE NT TO VERIFY THE CORRECTNESS AND COMPLETENESS OF THE RETURN BY REQUIRING THE PRESENC E OF THE ASSESSEE OR THE PRODUCTION OF EVIDENCE IN THIS BEHALF, THE ASSESSI NG OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE TH EREIN SPECIFIED, EITHER TO ATTEND AT THE ASSESSING OFFICERS OFFICE OR TO PRODUCE, OR TO CAUSE TO BE THERE PRODUCED, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN. SECTION 143(2) SUBSTITUTED BY THE DIRECT TAXES (AME NDMENT) ACT 1987 WHERE A RETURN HAS BEEN MADE UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, THE ASSESSING OFFIC ER SHALL IF HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDER PAID THE TAX IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THEREIN, EITHER TO ATTEND HIS OFFICE OR TO PRODUCE, OR CAUSE TO BE PRODUCED THERE, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RE TURN: 8. WHILE EXPLAINING THE SCOPE OF THIS AMENDMENT IN LAW, CBDT CIRCULAR NO 549, INTER ALIA, OBSERVED AS FOLLOWS: 5.12 SINCE UNDER THE PROVISIONS OF SUB-SECTION (1) OF THE NEW SECTION 143, AS ASSESSMENT IS NOT TO BE MADE NOW, THE PROVISIONS OF SUB-SECTIONS (2) AND (3) HAVE ALSO BEEN RECAST AND ARE ENTIRELY DIFFERENT FROM TH E OLD PROVISIONS. A NOTICE UNDER SUB-SECTION (2), WHICH WILL BE ISSUED ONLY IN CASES PICKED UP FOR SCRUTINY, IS NOW ISSUED ONLY TO ENSURE THAT THE ASSESSEE HAS NOT UND ERSTATED HIS INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDERPAID THE TA X IN ANY MANNER WHILE FURNISHING HIS RETURN OF INCOME. THIS MEANS THAT UN DER THE NEW PROVISIONS, IN AN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) IN A S CRUTINY CASE, NEITHER THE INCOME CAN BE ASSESSED AT A FIGURE LOWER THAN THE R ETURNED INCOME, NOR LOSS CAN BE ASSESSED AT A FIGURE HIGHER THAN THE RETURNED LOSS, NOR A FURTHER REFUND CAN BE GIVEN EXCEPT WHAT WAS DUE ON THE BASIS OF THE RETURNED IN COME, AND WHICH WOULD HAVE ALREADY BEEN ALLOWED UNDER THE PROVISIONS OF SECTIO N 143(1)(A)(II). 9. THIS IS BROADLY THE SAME APPROACH AS HAS BEEN CA NVASSED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE US. HOWEVER, THI S HAS NOT BEEN APPROVED BY HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF C IT VS BAKELITE HYLM LTD (237 ITR 392) AND BY HONBLE GUJARAT HIGH COURT IN THE C ASE OF GUJARAT GAS CO LTD VS JCIT (245 ITR 84). IN BOTH OF THESE CASES, REVENUE S STAND WAS THAT IN VIEW OF THE AMENDMENT IN SECTION 143(2), ASSESSED INCOME CANNOT BE LOWER THAN RETURNED INCOME. HOWEVER, THIS STAND WAS UNEQUIVOCALLY REJEC TED AND THEIR LORDSHIPS, IN GUJARAT GASES CASE (SUPRA), ALSO HELD THAT THE CBDT CIRCULAR, TO THE EXTENT EXTRACTS REPRODUCED ABOVE, IS NOT GOOD IN LAW. IN BAKELITE S CASE (SUPRA), THEIR LORDSHIPS I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 7 HELD THAT REFUND IN THE PROCESS OF ASSESSMENT IS PE RMISSIBLE, AND THE INCOME IS TO BE COMPUTED AS PER THE PROVISIONS OF THE ACT. IN VI EW OF THESE DISCUSSIONS, THE APPROACH SOUGHT TO BE ADOPTED BY THE LEARNED DEPART MENTAL REPRESENTATIVE IS DEVOID OF ANY LEGALLY SUSTAINABLE MERITS AND WE ARE UNABLE TO SHARE HIS PERCEPTIONS ABOUT PARADIGM SHIFT IN THE SCHEME OF SECTION 143(2 ). IN OUR CONSIDERED VIEW, WHATEVER BE THE GROUNDS ON WHICH THE CASE IS SELECT ED FOR SCRUTINY, ONCE THE ASSESSMENT PROCEEDINGS ARE INITIATED, THE DUTY OF T HE ASSESSING OFFICER IS TO DETERMINE CORRECT TAXABLE INCOME IN ACCORDANCE WITH THE LAW. RESPECTFULLY FOLLOWING THE VIEWS EXPRESSED BY HON BLE ANDHRA PRADESH HIGH COURT IN BAKELITES CASE (SUPRA) AND BY HONBLE GUJARAT HIGH COURT IN THE CA SE OF GUJARAT GASES( SUPRA), WE REJECT THE ARGUMENT OF THE LEARNED COUNSEL THAT IN THE SCHEME OF ASSESSMENT UNDER SECTION 143(2), AS IT EXISTS NOW, ONLY THE INTEREST S OF REVENUE ARE PROTECTED AND THE INTERESTS OF THE ASSESSEE ARE TO BE IGNORED. AS R EGARDS LEARNED DEPARTMENTAL REPRESENTATIVES RELIANCE ON GOETZES CASE (SUPRA), WE MAY ONLY REFER TO THE FOLLOWING OBSERVATIONS MADE, WHILE CONFIRMING ADMIS SION OF ADDITIONAL GROUND BY THE TRIBUNAL, BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS JAI PARABOLIC SPRINGS LIMITED (306 IR 42) : 17. IN GOETZE (INDIA) LTD. V. CIT [2006] 284 ITR 32 3 (SC), WHEREIN DEDUCTION CLAIMED BY WAY OF A LETTER BEFORE ASSESSING OFFICER, WAS DISAL LOWED ON THE GROUND THAT THERE WAS NO PROVISION UNDER THE ACT TO MAKE AMENDMENT IN THE RE TURN WITHOUT FILING A REVISED RETURN. APPEAL TO THE SUPREME COURT, AS THE DECISION WAS UP HELD BY THE TRIBUNAL AND THE HIGH COURT, WAS DISMISSED MAKING CLEAR THAT THE DECISION WAS LIMITED TO THE POWER OF ASSESSING AUTHORITY TO ENTERTAIN CLAIM FOR DEDUCTIO N OTHERWISE THAN BY REVISED RETURN, AND DID NOT IMPINGE ON THE POWER OF TRIBUNAL. 19. IN VIEW OF THE ABOVE DISCUSSION, IT IS VERY CLE AR THAT THERE IS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL G ROUND WHICH ACCORDING TO THE TRIBUNAL ARISES IN THE MATTER AND FOR THE JUST DECISION OF T HE CASE. THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. 10. AS REGARDS LEARNED DEPARTMENTAL REPRESENTATIVE S SUGGESTION THAT HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF NTPC (SUPRA ) IS NOT A BINDING PRECEDENT, IT IS EQUALLY DEVOID OF ANY MERITS. HIS RELIANCE ON H ONBLE SUPREME COURTS JUDGMENT IN THE CASE OF GURJARGRAVUERS (SUPRA) IS CLEARLY MI SPLACED AND IT CANNOT SUPPORT THE PROPOSITION THAT UNLESS A CLAIM IS MADE BEFORE THE ASSESSING OFFICER, IT CANNOT BE RAISED BEFORE THE TRIBUNAL EITHER. A THREE JUDGE BE NCH OF HONBLE SUPREME COURT, IN I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 8 THE CASE OF JUTE CORPORATION OF INDIA LTD VS CIT ( 187 ITR 688), HAS , WHILE DEALING WITH GURJARGRAVUERS DECISION, OBSERVED AS FOLLOWS: 6. IN GURJARGRAVURES (P.) LTD.'S CASE (SUPRA) THIS COURT HAS TAKEN A DIFFERENT VIEW, HOLDING THAT IN THE ABSENCE OF ANY CLAIM MADE BY TH E ASSESSEE BEFORE THE ITO REGARDING RELIEF, HE IS NOT ENTITLED TO RAISE THE QUESTION OF EXEMPTION UNDER SECTION 84 OF THE ACT BEFORE THE AAC HEARING APPEAL AGAINST THE ORDER OF THE ITO. IN THAT CASE THE ASSESSEE HAD MADE NO CLAIM BEFORE THE ITO FOR EXEMPTION UNDE R SECTION 84, NO SUCH CLAIM WAS MADE IN THE RETURN NOR ANY MATERIAL WAS PLACED ON R ECORD SUPPORTING SUCH A CLAIM BEFORE THE ITO AT THE TIME OF ASSESSMENT. THE ASSES SEE FOR THE FIRST TIME MADE CLAIM FOR EXEMPTION UNDER SECTION 84 BEFORE THE AAC WHO REJEC TED THE CLAIM BUT ON FURTHER APPEAL THE TRIBUNAL HELD THAT SINCE THE ENTIRE ASSESSMENT WAS OPEN BEFORE THE AAC THERE WAS NO REASON FOR HIS NOT ENTERTAINING THE CLAIM, OR DI RECTING THE ITO TO ALLOW APPROPRIATE RELIEF. ON A REFERENCE THE HIGH COURT UPHELD THE VI EW TAKEN BY THE TRIBUNAL. ON APPEAL THIS COURT SET ASIDE THE ORDER OF THE HIGH COURT AS IT WAS OF THE VIEW THAT THE AAC HAD NO POWER TO INTERFERE WITH THE ORDER OF ASSESSMENT MADE BY THE ITO ON A NEW GROUND NOT RAISED BEFORE THE ITO, AND, THEREFORE, THE TRIB UNAL COMMITTED ERROR IN DIRECTING THE AAC TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTIO N 84. APPARENTLY THIS VIEW TAKEN BY TWO JUDGE BENCH OF THIS COURT APPEARS TO BE IN CONF LICT WITH THE VIEW TAKEN BY THE THREE JUDGE BENCH OF THE COURT IN KANPUR COAL SYNDICATE'S CASE (SUPRA). IT APPEARS FROM THE REPORT OR OF THE DECISION IN GUJARAT HIGH COURT CAS E THE THREE JUDGE BENCH DECISION IN KANPUR COAL SYNDICATE'S CASE (SUPRA) WAS NOT BROUGH T TO THE NOTICE OF THE BENCH IN GURJARGRAVURES (P.) LTD.'S CASE (SUPRA). IN THE CIR CUMSTANCES THE VIEW OF THE LARGER BENCH IN KANPUR COAL SYNDICATE'S CASE (SUPRA) HOLD THE FIELD. HOWEVER, WE DO NOT CONSIDER IT NECESSARY TO OVER-RULE THE VIEW TAKEN I N GURJARGRAVURES (P.) LTD.'S CASE (SUPRA) AS IN OUR OPINION THAT DECISION IS FOUNDED ON THE SPECIAL FACTS OF THE CASE, AS WOULD APPEAR FROM THE FOLLOWING OBSERVATIONS MADE B Y THE COURT: '...AS WE HAVE POINTED OUT EARLIER, THE STATEMENT O F CASE DRAWN UP BY THE TRIBUNAL DOES NOT MENTION THAT THERE WAS ANY MATERIAL ON REC ORD TO SUSTAIN THE CLAIM FOR EXEMPTION WHICH WAS MADE FOR THE FIRST TIME BEFORE THE APPELLATE ASSISTANT COMMISSIONER. WE ARE NOT HERE CALLED UPON TO CONSID ER A CASE WHERE THE ASSESSEE FAILED TO MAKE A CLAIM THOUGH THERE WAS NO EVIDENCE ON RECORD TO SUPPORT IT, OR A CASE WHERE A CLAIM WAS MADE BUT NO EVIDENCE OR INSU FFICIENT EVIDENCE WAS ADDUCED IN SUPPORT. IN THE PRESENT CASE NEITHER ANY CLAIM W AS MADE BEFORE THE INCOME-TAX OFFICER, NOR WAS THERE ANY MATERIAL ON RECORD SUPPO RTING SUCH A CLAIM.' (P. 5) THE ABOVE OBSERVATIONS DO NOT RULE OUT A CASE FOR R AISING AN ADDITIONAL GROUND BEFORE THE AAC IF THE GROUND SO RAISED COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAGE WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER W AS MADE OR THAT THE GROUND BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW. THERE MAY BE SEVERAL FACTORS JUSTIFYING RAISING OF SUCH NEW PLEA IN APPEAL, AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. IF THE AAC IS SATISFIED HE WOULD BE ACTI NG WITHIN HIS JURISDICTION IN CONSIDERING THE QUESTION SO RAISED IN ALL ITS ASPECTS. OF COURS E, WHILE PERMITTING THE ASSESSEE TO RAISE AN ADDITIONAL GROUND, THE AAC SHOULD EXERCISE HIS DISCRETION IN ACCORDANCE WITH LAW AND REASON. HE MUST BE SATISFIED THAT THE GROUN D RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD RE ASONS. THE SATISFACTION OF THE AAC DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CA SE AND NO RIGID PRINCIPLES OR ANY HARD AND FAST RULE CAN BE LAID DOWN FOR THIS PURPOS E. 11. A FULL BENCH OF HONBLE BOMBAY HIGH COURT, IN T HE CASE OF AHMEDABAD ELECTRICITY CO LTD VS CIT ( 199 ITR 351) ALSO HAD A N OCCASION TO DEAL WITH THE I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 9 IMPACT OF HONBLE SUPREME COURTS JUDGMENT IN THE C ASE OF GURJARGRAVUERS (SUPRA), AND THEIR LORDSHIPS, INTER ALIA, OBSERVED AS FOLLOW S: 25. IN THE CASE OF GURJARGRAVURES (P.) LTD. (SUPRA) , THE SUPREME COURT WAS CONCERNED WITH A CASE WHERE THE TRIBUNAL HAD ALLOWE D A POINT TO BE RAISED WHICH HAD NOT BEEN TAKEN EITHER BEFORE THE ITO OR BEFORE THE AAC. THE SUPREME COURT HELD THAT SUCH A POINT SHOULD NOT HAVE BEEN ALLOWED TO BE RAISED. IT SAID, HOWEVER, THAT IT WAS NOT CALLED UPON TO CONSIDER A CASE WHER E THE ASSESSEE HAD FAILED TO MAKE A CLAIM ALTHOUGH THERE WAS EVIDENCE ON RECORD TO SUPPORT IT; NOR WAS IT CALLED UPON TO CONSIDER A CASE WHERE A CLAIM WAS MADE BUT THERE WAS NO EVIDENCE OR INSUFFICIENT EVIDENCE ADDUCED IN SUPPORT OF THE CLA IM. IN THE CASE BEFORE THE SUPREME COURT NEITHER ANY CLAIM HAD BEEN MADE BEFOR E THE ITO NOR WAS THERE ANY MATERIAL ON RECORD SUPPORTING SUCH A CLAIM AND, THE REFORE, SUCH A CLAIM OUGHT NOT TO HAVE BEEN ALLOWED TO BE RAISED BY THE TRIBUNAL BEFO RE IT FOR THE FIRST TIME. 26. THIS DECISION HAS NOW BEEN EXPLAINED BY THE SUP REME COURT IN THE CASE OF JUTE CORPN. OF INDIA LTD. V. CIT [1991] 187 ITR 688 AS TURNING UPON ITS OWN SPECIAL FACTS. WE WILL REVERT TO IT A LITTLE LATER. THIS DECISION OF THE SUPREME COURT IN THE CASE OF GURJARGRAVURES (P.) LTD. (SUPRA) WAS ALSO DISTINGUI SHED BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF GANGAPPA CABLES LTD. (SUPRA). THE ANDHRA PRADESH HIGH COURT ALSO SAID THAT THE TRIBUNAL DISPOSING OF AN APPEAL UNDER THE ACT HAS GOT THE POWER TO ALLOW THE ASSESSEE TO PUT FORWARD A NEW CLAIM, NOTW ITHSTANDING THE FACT THAT SUCH A CLAIM WAS NOT RAISED BY HIM BEFORE THE ITO OR THE A AC, PROVIDED THAT THERE IS SUFFICIENT MATERIAL ON RECORD TO ALLOW SUCH A CLAIM . 12. IN VIEW OF THE ABOVE POSITION OF LAW, LEARNED D EPARTMENTAL REPRESENTATIVES RELIANCE ON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF GURJARGRAVURES (SUPRA) IS OF NO ASSISTANCE TO HIS CAUSE. IT DOES NOT LAY D OWN ANY GENERAL PROPOSITION OF LAW ON THE QUESTION OF POWERS OF THE TRIBUNAL, NOR DOES IT RESTRICT THE LEGAL POSITION LAID DOWN BY LARGER BENCHES IN THE CASES OF NTPC (SUPRA) OR JUTE CORP OF INDIA (SUPRA). WE REJECT THIS ARGUMENT AS WELL. 13. LEARNED DEPARTMENTAL REPRESENTATIVES OBJECTION TO ADJUDICATION ON THIS ISSUE IS ON THE PLEA THAT ALL THE RELATED FACTS ARE NOT ALREADY SET OUT IN THE ORDERS IS ALSO INCORRECT. THE FACTS BEING ON RECORD AND FAC TS HAVING BEEN SET OUT IN THE ASSESSMENT ORDERS ARE EXPRESSIONS OF DIFFERENT SCOP E. THAT APART, ALL THAT HONBLE SUPREME COURT HAS OBSERVED IN NTPCS CASE IS THAT W HERE ALL THE NECESSARY FACTS ARE ON ASSESSMENT RECORDS, THERE IS GOOD REASON FOR NOT EXERCISING THE DISCRETION OF ADMITTING ADDITIONAL GROUND OF APPEAL ON A QUESTION OF LAW, BUT, IN OUR HUMBLE UNDERSTANDING, THIS OBSERVATION CANNOT BE CONSTRUED TO MEAN THAT JUST BECAUSE SOME ADDITIONAL FACTUAL VERIFICATIONS ARE NEEDED, T RIBUNAL IS DENUDED OF POWERS TO ADMIT THE ADDITIONAL GROUND OF APPEAL ON QUESTIONS OF LAW. IN ANY EVENT, HAVING I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 10 REGARD TO THE FACT THAT ISSUES RAISED IN THE ADDITI ONAL GROUNDS OF APPEAL ARE QUESTION OF LAW ARISING OUT OF FACTS ON RECORD, WE REJECT TH IS OBJECTION AS WELL. 14. IN VIEW OF THE REASONS SET OUT ABOVE, WE REJECT THE OBJECTIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE TECHNICAL PLEA TAK EN BY THE CIT(A) STANDS REJECTED TOO, AND WE HOLD THAT THE CIT(A) OUGHT TO HAVE DECIDED THE MATTER ON MERITS. WE, THEREFORE, DEEM IT FIT AND PROPER TO DI RECT THE CIT(A) TO ADJUDICATE ON THE ALTERNATIVE PLEA RAISED BY THE ASSESSEE , IN ACCORD ANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER, AND AFTER GIVING A FAIR AND REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 15. GROUND NO. 1 IS THUS ALLOWED FOR STATISTICAL PU RPOSES. 16. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOL LOWING GRIEVANCE: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE C IT (A) SHOULD HAVE ALLOWED DEDUCTION UNDER SECTION 80IA IN RESPECT OF NEW INDUSTRIAL UNITS OF LIGHT ENGINE UNIT AT AURANGABAD AND GEAR BOX MAN UFACTURING UNIT AT FALTA ON PROFITS BEFORE DEDUCTING FINANCIAL CHARGES ALLOCATION FOLLOWING THE DECISION OF THE BOMBAY HIGH COURT AND THE ITAT IN APPELLANTS OWN CASE OF EARLIER YEAR. 17. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT IN ASSESSE ES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2003 -04 ( ITA NO. 5221/MUM/96; ORDER DATED 11 TH NOVEMBER 2003), WHEREIN, FOLLOWING THE ORDERS FOR THE ASSESSMENT YEARS 1986-87, 1987-88 AND 1988-89, THE ISSUE WAS D ECIDED IN FAVOUR OF THE ASSESSEE. IN THE ORIGINAL SPEAKING ORDER OF THE TR IBUNAL, IT SEEMS THAT FOLLOWING THE DECISION OF ITAT BANGALORE BENCH IN THE CASE OF MAN IPAL POWER PRESS V ITO, 29 TTJ(BANG)197, THE ACTION OF THE CIT(A) IN DIRECTIN G THE AO NOT TO REDUCE THE COST OF FINANCIAL CHARGES FOR THE PURPOSE OF DEDUCTION UNDE R SECTION 80-I, WAS CONFIRMED. THE STAND SO TAKEN BY THE COORDINATE BENCHES HAS BE EN UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 16 TH APRIL, 2007. I.T.A NO.5733/ MUM/2009 GREAVES LIMITED 11 18. IN VIEW OF THE ABOVE DISCUSSIONS, AND RESPECTFU LLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT, THE MATTER DESERVES TO BE D ECIDED IN FAVOUR OF THE ASSESSEE AND THE GRIEVANCE OF THE ASSESSEE DESERVES TO BE UP HELD. 19. THE OBJECTION TAKEN BY THE CIT(A), AS ALSO BY T HE LEARNED DEPARTMENTAL REPRESENTATIVE, IS THAT THE CLAIM WAS NOT MADE BY W AY OF REVISED RETURN AND ACCORDINGLY IT COULD NOT HAVE BEEN ENTERTAINED BY T HE ASSESSING OFFICER. THE ARGUMENTS ARE ON THE SAME LINES, AS WERE MADE IN TH E CONTEXT OF FIRST GROUND OF APPEAL WHICH WE HAVE REJECTED EARLIER IN THIS ORDER . FOLLOWING THE STAND TAKEN EARLIER IN THIS ORDER, WHILE DEALING WITH FIRST GROUND OF A PPEAL, WE REJECT THESES TECHNICAL OBJECTIONS RAISED BY THE AUTHORITIES BELOW. 20. GROUND NO. 2 IS THUS ALLOWED. 21. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TER MS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 29 TH APRIL, 2011 SD/- SD/- (ASHA VIJAYRAGHVAN ) (PRAMOD KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; __29 TH D AY OF APRIL , 2011 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER MUMBAI CITY , MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI