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Indian Aluminium Company Ltd. Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Kolkata
Decided On
Judge
Reported in(1983)5ITD338(Kol.)
AppellantIndian Aluminium Company Ltd.
Respondentincome-tax Officer
Excerpt:
.....companies (profits) surtax act, 1964 ('the act'), rejected the assessee's claim for inclusion of bank loans amounting to rs. 72,57,782, while determining the capital base under the act.3. when the matter went up to the aac, it was contended on behalf of the assessee that the loan in question was obtained by the assessee for integrated expansion project under which expanded production facilities in factories at belur, hirakud, muri and alupuram were set up. it was submitted that capital cost of this project was met out of debenture loan, aluminium ltd. loan, bank loan and the shortfall from retained profit. the aac after considering the submissions made before him held that the bank loans satisfied the conditions prescribed under rule 1(v) of the second schedule of the act. therefore,.....
Judgment:
1. This appeal has been filed by the assessee against the order of the Commissioner (Appeals) dated 10-8-1981 by which he rectified the order passed by the AAC.2. The STO while making the assessment under Section 6(2) of the Companies (Profits) Surtax Act, 1964 ('the Act'), rejected the assessee's claim for inclusion of bank loans amounting to Rs. 72,57,782, while determining the capital base under the Act.

3. When the matter went up to the AAC, it was contended on behalf of the assessee that the loan in question was obtained by the assessee for integrated expansion project under which expanded production facilities in factories at Belur, Hirakud, Muri and Alupuram were set up. It was submitted that capital cost of this project was met out of debenture loan, Aluminium Ltd. loan, bank loan and the shortfall from retained profit. The AAC after considering the submissions made before him held that the bank loans satisfied the conditions prescribed under Rule 1(v) of the Second Schedule of the Act. Therefore, this loan will have to be taken in to the capital base under the Second Schedule. He, therefore, directed the STO to recompute the capital base by including the bank loan of Rs. 72,57,782. Thereafter, the STO by his letter dated 13-3-1981 requested the Commissioner (Appeals) to rectify the aforementioned order of the AAC as he was of the opinion that the conclusion of the AAC regarding inclusion of bank loan while computing the capital base was not legally correct. The Commissioner (Appeals) passed an order under Section 13 of the Act on 10-8-1981 by observing as under : In my opinion the order of the AAC dated 12-8-1977 while disposing of the main appeal contained an apparent error in that while deciding that the appellant was entitled to inclusion of the capital borrowed from the bank he took the figure of such capital at Rs. 72,57,782. While there is no dispute that the principal enunciated by him is correct, it appears, he overlooked the fact that the loan of Rs. 72,57,782 was taken for considering the re-payment of the loans to the bank to the extent of Rs. 62,21,946 as pointed out by the ITO in his application dated 13-7-1981. Therefore, the effective amount that was to be included in the capital by way of bank loan should have been Rs. 72,57,782 minus Rs. 62,21,946, i.e., Rs. 10,35,836. It is this amount which should have been included in the capital base for working out the chargeable profit. Since there is no dispute about the mistake as pointed out above, this is being rectified herewith. The ITO will please give effect to this order.

4. Against the aforesaid order of the Commissioner (Appeals), the assessee has preferred the present appeal before us and the learned counsel for the assessee vehemently urged that the Commissioner (Appeals) had no jurisdiction to rectify an order passed by the AAC. He also invited our attention to the Board's Circular No. 269 [F.No.279/71/80-ITJ] [see Taxmanrn's Direct Taxes Circulars, Vol. 1, pp.

808-11, dated 29-4-1980], wherein the Board made it clear that even after the appellate jurisdiction of a case has been transferred from the AAC to the Commissioner (Appeals), any subsequent action in relation to the AAC's order will be taken by the AAC concerned and not by the Commissioner (Appeals). He, therefore, submitted that the present order of the Commissioner (Appeals) having been not in accordance with law is fit to be set aside. The learned departmental representative strongly supported the order of the Commissioner (Appeals).

5. Having heard the submissions of both the parties and after considering the facts of the case, we are of the opinion that the submissions of the learned counsel for the assessee are well-founded.

With a view to rectifying any mistake apparent from the record, the ITO, AAC/Commissioner (Appeals), Commissioner or the Tribunal may amend any order passed by him/it and non else. Therefore, even after the change of jurisdiction of the concerned officer who originally passed the order, any mistake crept into such order cannot be passed by anybody else other than the officer who passed the original order. This view is supported by the Board's Circular No. 269 [F.No.279/71/80-ITJ], dated 29-4-1980 mentioned above. This being the position, we are of the opinion that the Commissioner (Appeals) had no jurisdiction to rectify the order passed by the AAC in Appeal No.148/C-III/l975-76, dated 12-8-1977 even though at the relevant time the jurisdiction of the AAC over the case was transferred to the Commissioner (Appeals). We, therefore, find it difficult to sustain the order of the Commissioner (Appeals). His order is hereby set aside.


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