Skip to content


Commissioner of Income-tax Vs. Tuttapullam Estates - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 254 of 1969 (Reference No. 74 of 1969)
Judge
Reported in[1976]104ITR418(Mad)
ActsIncome Tax Act - Sections 66(2)
AppellantCommissioner of Income-tax
RespondentTuttapullam Estates
Appellant AdvocateJ. Jayaraman, Adv.
Respondent AdvocateS. Swaminathan and ;K. Ramgopal, Advs.
Excerpt:
- .....in its accounts under the head 'welfare expenses' and claimed it as a deduction in the relevant assessment year 1961-62. this claim was disallowed by the income-tax officer on the ground that the gratuity was in respect of a period of service prior to december, 1947, and that in any event the amount was not paid in the year of account relevant to the assessment year 1961-62.3. aggrieved against the said disallowance, the assesses took the matter before the appellate assistant commissioner. appeals have also been filed by the assessee before the appellate assistant commissioner in respect of the assessment years 1959-60 and 1960-61. the appellate assistant commissioner disposed of the appeals relating to ail the three years by a consolidated order dated january 25, 1964. as regards the.....
Judgment:

Ramanujam, J.

1. The asseesee-firm purchased an estate comprising of tea and coffee plantations from one Tuttapullam Tea and Coffee Plantations Private Ltd. on August 21, 1958. The said Tuttapullam Tea and Coffee Plantations Private Ltd. had earlier in its turn purchased the plantations from one M/s. Bhavani Tea Produce Company on December 22, 1947. After the purchase of the estate by the assessee-firm the workers raised a dispute regarding the gratuity payable to them in respect of the period of their service with the earlier employer, M/s. Bhavani Tea Produce Company. The said dispute was referred to the Industrial Tribunal, Madras. On December 27, 1958, the Industrial Tribunal passed an order directing the assessee to pay to the. workers Rs. 28,206 as gratuity in respect of the period during which the employees had served M/s. Bhavani Tea Produce Company.

2. In the account year ended March 31, 1961, the assessee-firm debited the said sum of Rs. 28,206 in its accounts under the head 'Welfare Expenses' and claimed it as a deduction in the relevant assessment year 1961-62. This claim was disallowed by the Income-tax Officer on the ground that the gratuity was in respect of a period of service prior to December, 1947, and that in any event the amount was not paid in the year of account relevant to the assessment year 1961-62.

3. Aggrieved against the said disallowance, the assesses took the matter before the Appellate Assistant Commissioner. Appeals have also been filed by the assessee before the Appellate Assistant Commissioner in respect of the assessment years 1959-60 and 1960-61. The Appellate Assistant Commissioner disposed of the appeals relating to ail the three years by a consolidated order dated January 25, 1964. As regards the gratuity amount of Rs. 28,206 paid by the assessee to the workers as per the said award of the Industrial Tribunal, he agreed with the assessee and held that it is an allowable deduction in the assessment year 1961-62.

4. As against this order of the Appellate Assistant Commissioner relating to the sum of Rs. 28,206 the department filed an appeal before the Income-tax Tribunal and contended that the said sum of Rs. 28,206 cannot be taken to be an allowable deduction in the assessment year 1961-62, and that if at all it can be allowed as a deduction in the assessment year 1959-60. The Tribunal, by its order dated September 16, 1966, allowed the appeal holding that the sum of Rs. 28,206 was not allowable as a business deduction hi the assessment year 1961-62, but was allowable only in the assessment year 1959-60, since the liability was determined as a result of the adjudication by the Industrial Tribunal only in the year of account ended March 31, 1959.

5. At the time when the Tribunal disposed of the departmental appeal for the assessment year 1961-62, there was also pending before it the assessee's appeal for the assessment year 1959-60. While disposing of the said appeal of the assessee relating to the year 1959-60, the Tribunal took note of its earlier decision rendered in the departmental appeal relating to the year 1961-62, holding that the expenditure of Rs. 28,206 was allowable in the assessment year 1959-60 and gave relief to the assessee so far as that sum is concerned. This was done by the Tribunal at the instance of the assessee who had earlier on May 25, 1966, raised additional grounds of appeal taking notice of the fact that the department has challenged the order of the Appellate Assistant Commissioner holding that the said sum is an allowable item in the assessment year 1961-62.

6. Aggrieved against the order of the Tribunal, the department sought for and obtained this reference under Section 66(2) of the Income-tax Act. The question referred to us is as follows :

'Whether, on the facts and in the circumstances of the case, the assessee's appeal in respect of the assessment year 1959-60 was properly heard and determined, when the Tribunal entertained and decided the additional ground of appeal raised by the assessee for deduction of Rs. 28,206 in the computation of the assessee's business income for the assessment year 1959-60?'

7. It is contended on behalf of the revenue that the Tribunal had no jurisdiction to give relief to the assessee by taking Rs. 28,206 as an allowable deduction, while the original grounds of appeal filed by the assessee in relation to the assessment year 1959-60 did not comprise the question of allowability of the said sum. It is stated that the subject-matter of appeal before the Tribunal, was limited by the grounds of appeal filed by the assessee and that it is not open to the Tribunal to go beyond the subject-matter of the appeal.

8. It is true that in the original grounds of appeal before the Tribunal, in relation to the year 1959-60, the assessee had not claimed relief in relation to the said sum of Rs. 28,206. But that was because the Appellate Assistant Commissioner had granted relief in relation to the said sum in the assessment year 1961-62. When the assessee found that the department has questioned the order of the Appellate Assistant Commissioner granting relief in relation to the said sum in the assessment year 1961-62, it had filed additional grounds of appeal on May 25, 1966, claiming that the said sum of Rs. 28,206 was an allowable item of expenditure in the assessment year 1959-60. The assessee obtained leave to file the additional grounds of appeal after notice to the department. The department did not then file any counter-statement to the petitioner's request for leave to file additional grounds of appeal. Once the Tribunal had allowed the additional grounds of appeal to be raised, it should be taken that the assessee has raised the additional grounds of appeal even at the first instance when the appeal was filed. It should, therefore, be held that the subject-matter, of appeal before the Tribunal also covered the sum of Rs. 28,206 which was claimed by the assessee as an item of allowable expenditure in the assessment year 1959-60. We have, therefore, to hold that the Tribunal has acted within its jurisdiction in taking note of the additional grounds of appeal and granting the relief to the assessee in accordance with its earlier decision in the departmental appeal in relation to the assessment year 1961-62 wherein it was held that the said sum is an allowable expenditure in the assessment year 1959-60.

9. As already stated, the Appellate Assistant Commissioner disposed of the assessee's appeal for the years 1959-60, 1960-61 and 1961-62 by a consolidated order. In that order he had held that the said sum is to be allowed as a deduction only in the year 1961-62. This amounts to a finding that this item of expenditure is not allowable in the assessment year 1959-60 but allowable only in the assessment year 1961-62. On the said inferential finding the assessee, at the time of his filing the appeal in respect of the assessment year 1959-60, could have raised a ground of appeal that the Appellate Assistant Commissioner should have held that this item is an allowable expenditure in the assessment year 1959-60 and not in the year 1961-62, If that is so, we do not see any reason as to why the assessee cannot raise the additional grounds of appeal before the Tribunal relating to this question of deduction, having regard to the subsequent events that had taken place in that the department challenged the decicion of the Appellate Assistant Commissioner holding that it is an allowable expenditure in the assessment year 1961-62.

10. The result is, the question referred is answered in the affirmative and against the revenue. The assessee will be entitled to his costs. Counsel fee Rs. 250.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //