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Oriental Science Apparatus Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Chandigarh
Decided On
Judge
Reported in(1983)6ITD541(Chd.)
AppellantOriental Science Apparatus
Respondentincome-tax Officer
Excerpt:
.....of the income-tax appellate tribunal are very wide. he was, however, fair enough to admit that claim in respect of the said proportionate expenses was neither made before the ito nor before the commissioner (appeals) when the assessee filed its first appeal. he submitted that the conduct of the assessee had been very co-operative and in support of his contention regarding admission of additional ground pertaining to weighted deduction on proportionate expenses, he placed his reliance on the cases of cit v. sayaji mills ltd. [1974] 94 itr 26 (guj.) and navnit lal c. javeri v. k.k. sen, aac [1965] 56 itr 198 (sc). the learned departmental representative while contesting the admission of additional ground, vehemently disputed the admission and made available to us punjab & haryana.....
Judgment:
1. This is an appeal preferred by the assessee Oriental Science Apparatus Workshop. The assessment year involved is 1976-77 for which the relevant 'previous year' ended on 31-3-1976. Besides the two grounds raised in respect of 'business promotion expenses' amounting to Rs. 1,247 and Rs. 477 and the assessee's claim of weighted deduction in respect of Rs. 33,691 received less as 'difference in exchange value on exports' and weighted deduction on Rs. 3,58,633 paid as 'air and sea freight, railway and truck freight and insurance charges of goods', the assessee came forward with an additional ground in respect of : Expenses of Rs. 3,10,902 out of total of expenses of Rs. 8,82,832 in proportion to the export sales of 91 per cent.

and prayed that weighted deduction on that too may be allowed. While addressing the Bench on the admission of additional ground, the learned counsel for the assessee, Mr. O.P. Bansal, submitted that powers of the Income-tax Appellate Tribunal are very wide. He was, however, fair enough to admit that claim in respect of the said proportionate expenses was neither made before the ITO nor before the Commissioner (Appeals) when the assessee filed its first appeal. He submitted that the conduct of the assessee had been very co-operative and in support of his contention regarding admission of additional ground pertaining to weighted deduction on proportionate expenses, he placed his reliance on the cases of CIT v. Sayaji Mills Ltd. [1974] 94 ITR 26 (Guj.) and Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198 (SC). The learned departmental representative while contesting the admission of additional ground, vehemently disputed the admission and made available to us Punjab & Haryana High Court decision in the case of Hansa Agencies (P.) Ltd. v. CIT [ITC No. 51 of 1978], according to which no additional ground in respect of Section 35B of the Income-tax Act, 1961 ('the Act') could be admitted in respect of which the claim could not be made before the lower authorities. He also made available to us copy of the Tribunal order dated 28-1-1978 in IT Appeal. No. 471 (ADB) of 1976-77 in Hansa Agencies.

2. After taking into consideration the rival submissions regarding additional ground and looking to the fact that neither at the assessment stage before the ITO nor in the course of first appeal before the Commissioner (Appeals), the assessee had put in the claim of weighted deduction in respect of proportionate expenses and under these circumstances and on the basis of these facts, it cannot be said that the additional ground proposed to be taken by the assessee can be adjudicated without going into details or obtaining further information on the issue. The first case on which reliance was placed by the learned counsel for the assessee was the Gujarat High Court decision in Sayaji Mills Ltd.'s case (supra) in which it was held by their Lordships that : All questions, whether of law or of fact, which relate to the assessment of the assessee may ordinarily be allowed to be raised by him in appeal even though not raised before the Income-tax Officer, if grant of relief would be available on the determination of such questions . . ." (p. 27) In this case, the Tribunal had admitted the claim of the assessee in the interest of substantial justice and this action of the Tribunal had found approval of their Lordships of the Gujarat High Court. Reliance of the learned counsel for the assessee on Navnit Lal C. Javeri's case (supra) was to support his contention that a Board's circular to that effect has to be treated as binding and it should be followed. A very recent decision from their Lordships of the Supreme Court regarding admission of additional ground is available in the case of Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 in which reversing the decision of the High Court, it was held : "that, as neither was any claim made before the Income-tax Officer regarding the relief under Section 84 nor was there any material on record in support thereof, and from the mere fact that such a claim had been allowed in subsequent years it could not be assumed that the prescribed conditions justifying a claim for exemption under Section 84 were also fulfilled, the Tribunal was not competent to hold that the Appellate Assistant Commissioner should have entertained the question of relief under section 84 or to direct the Income-tax Officer to allow the relief.

The above-said decision came to be distinguished by the Andhra Pradesh High Court in the case of C1T v. Gangappa Cables Ltd. [1979] 116 ITR 778 but even in that case their Lordships observed that : "The Appellate Tribunal disposing of an appeal under the I.T. Act has got the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the ITO or the AAC, provided there is sufficient material on record to allow such a claim." (p. 778) In the instant case, on the basis of facts alone there is no sufficient material on record to warrant the admission of additional ground. On top of all these, we, sitting at Chandigarh, have direct finding of the Punjab and Haryana High Court in Hansa Agencies (P.) Ltd.'s case (supra) available for our guidance in which after additional claim in respect of weighted deduction under Section 35B was not admitted by the AAC, the assessee carried the matter before the Tribunal and the Tribunal not only rejected the contention raised by the assessee while confirming the action of the AAC in rejecting the additional claim but even declined to refer the question at the instance of the assessee under Section 256(1).

Aggrieved by the Tribunal's refusal, when the assessee made an application under Section 256(2) requiring the following question of law to the High Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the AAC was justified in refusing to admit a fresh ground of appeal in respect of deduction under Section 35B on items in respect of which no ciaim had been made before the ITO ?" their Lordships passed the following order : "Heard. Dismissed."Under the circumstances, cases relied upon by the learned counsel for the assessee cannot carry the assessee's case any further and its request inrespect of admission of additional ground for proportionate expenses, is rejected.

3. Now coming to the first ground in the assessee's appeal, the assessee's claim is that Rs. 1,247 and Rs. 477 were the expenses for business promotion and expenses on foreign visitors at Delhi branch.

The learned counsel for the assessee submitted that in respect of Rs. 477 even the Commissioner (Appeals) has not discussed anywhere in his order. He vehemently argued that the type of expenses which are under dispute, are very much incidental to business and very large number of High Court decisions are available in support of the assessee's contention. The learned departmental representative, on the other hand, relied on the order of the Commissioner (Appeals) and submitted that the Punjab and Haryana High Court decision on the issue is against the assessee.

4. After taking into consideration the rival submissions and looking to the facts, when we find it as a fact that Rs. 1,247 were not spent on business promotion but on customers for refreshment, etc., and Rs. 477 being expenses on foreign visitors at Delhi branch, the same cannot be taken out of the net of 'entertainment expenses'. The contention of the assessee in respect of both the items is covered by the Punjab and Haryana High Court decision in the case of CIT v. Gheru Lal Bal Chand [1978] 111 ITR 134, on which reliance is placed by the Commissioner (Appeals) while rejecting the assessee's claim in respect of Rs. 1,247.

Even if there is no discussion available in the Commissioner (Appeals)'s order regarding petty sum of Rs. 447, it is not warranted to multiply the litigation and send it back to his file because the sum of Rs. 447 deserved to meet the same fate as the sum of Rs. 1,247. The contentions raised by the assessee, therefore, in respect of both the items in ground No. 1 are rejected.

5. The assessee in rest of the grounds contests the finding of the Commissioner (Appeals), who rejected the assessee's claim of weighted deduction in respect of Rs. 33,691 being sum received less as difference in exchange value on export and, another sum of Rs. 3,58,633 which is in respect of air and sea freight, railway and truck freight and insurance charges of goods, etc. Besides, the assessee has also raised a dispute regarding weighted deduction of Rs. 447. In support of his contention, the learned counsel for the assessee relied on large number of the Tribunal's decisions which are in the assessee's favour but he was fair enough to admit that the same were prior to the Special Bench decision dated 17-6-1978 in IT Appeal Nos. 3255 and 3330 (Bom.) of 1976-77 in the case of J.H. & Co. since reported in [1982] 1 SOT 150 (Bom.) The learned departmental representative in respect of this contention placed his reliance on the order of the Commissioner (Appeals).

6. After taking into consideration the rival submissions and looking to the facts, we are unable to interfere in the finding of the Commissioner (Appeals) in respect of the three items. The assessee does not have any case of weighted deduction in respect of Rs. 447 when the same have been disallowed as entertainment expenses. The assessee's claim in respect of other two items is also rejected as per principles laid down by the Special Bench and the reasoning given therein.

Consistently, the Tribunal Benches all over India are against the assessee pertaining to claim of weighted deduction in respect of items which result either as a difference in exchange rate or value of export or as freight, insurance, etc. The action of the Commissioner (Appeals), therefore, in this regard is confirmed.


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