Dipak Kumar Sen, J.
1. Madhu Jayanti (Pvt.) Ltd., the assessee, carries on business, inter alia, in the manufacture and export of tea. In the assessment year 1975-76, the corresponding previous year being the one ended on December 31, 1974, the assessee in its revised return for income-tax claimed weighted deduction for export markets development allowance under Section 35B of the I.T. Act, 1961, in respect of its export promotion expenses under the following four heads :
(a) Air freight on parcels for samples ;
(b) Commission paid in foreign countries to agents to obtain orders ;
(c) Steamer freight on export consignments ;
(d) Premium paid to the Export Credit Guarantee Corporation.
2. The ITO allowed deduction as claimed on the air freight and commission but disallowed the claim for deduction in respect of steamer freight and the premium paid to the Export Credit Guarantee Corporation.
3. The assessee preferred an appeal before the AAC against the disallowance of the deduction claimed for the said items. In the appeal, the assessee claimed further deduction under Section 35B of the I.T. Act, in respect of the following further heads :
(a) Agency commission paid from the Cochin branch of the assessee ;
(b) Inspection and sampling charges ;
(c) Telex charges ;
(d) Packing expenses ;
(e) Bank interest ;
(f) Shipping expenses.
4. The AAC allowed the deduction claimed of the agency commission spent from the Cochin branch of the assessee and also of the premium paid to the Export Credit Guarantee Corporation. Further deductions allowed were in respect of inspection charges, packing expenses and telex expenses. Deductions claimed of the steamer freight, shipping expenses and bank interest were disallowed. Further appeals were preferred both by the assessee and the Revenue before the Income-tax Appellate Tribunal.
5. In its appeal, the assessee sought to raise the following two new grounds :
(1) Export markets development allowance should have been given in respect of the total expenditure in the assessee's trading department of Calcutta office which was incurred wholly and exclusively on performance of services outside India in connection with or incidental to the execution of the assessee's contract for supply of goods outside India.
(2) Such allowance in any event ought to have been given in respect of expenditure for-
(a) Printing and stationery ;
(b) Rent and taxes ;
(c) Salary and wages ;
(d) Telephone charges ;
(e) West Bengal sales tax & surcharge ;
(f) Bank interest.
6. The Tribunal affirmed the order of the AAC in respect of disallowance of steamer freight, shipping expenses and bank interest.
7. On the new grounds of appeal sought to be raised by the assessee, the Tribunal noted that the assessee had not raised any claim contained in the said grounds either before the ITO or the AAC. It was held that the said grounds of appeal did not arise out of the order of the AAC. The Tribunal found further that there was no evidence or material on record to prove that the expenditure referred to in the additional grounds had been laid out wholly or exclusively by way of export expenditure or that the same were covered by Clauses (i) to (ix) of Section 35B(lXb) of the Act. The Tribunal, following the decision of the Supreme Court in Addl. CIT v. Gurjargrawres P. Ltd, : 111ITR1(SC) , refused to allow the assessee to raise the additional grounds.
8. On an application by the assessee under Section 256(2) of the I.T. Act, the Tribunal was directed to refer the following questions of law for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in refusing to admit the two additional grounds of appeal raised by the applicant ?
2. Whether, in any event, the Tribunal was right in law in not admitting the additional ground No. 2 raised by the applicant which did not require consideration of material not already on record ?'
9. At the hearing, learned advocate for the assessee submitted that the assessee had claimed weighted deduction under Section 35B of the I.T. Act, 1961, in respect of some items of expenditure at the initiation of the assessment proceedings before the ITO. Further claim in respect of other items were made before the AAC. Under the additional grounds of appeal raised before the Tribunal, the assessee sought to include further items of expenditure in its claim under Section 35B. The assessee thereby did not raise a new claim for the first time before the Tribunal.
10. The new items in the additional grounds of appeal were supported by evidence on record inasmuch as deduction in respect of the same had been claimed and allowed under Section 37 of the Act. Further, weighted deduction for the said items were being claimed under Section 35B on the same evidence on record.Learned advocate submitted further that in the facts and circumstance, the principles laid down by the Supreme Court in Gurjargravures (P.) Ltd.'s case : 111ITR1(SC) , did not apply. The Supreme Court in its earlier decisions had laid down principles relevant to the controversy in the instant case and the later decision in Gurjargravures had to be considered in the light of the said earlier decisions of larger Benches of the Supreme Court.
11. Learned advocate for the Revenue contended, on the other hand, that the additional grounds sought to be raised before the Tribunal did not arise either out of the order of the ITO or that of the AAC. He submitted that there were no material or evidence on record to support such claim and, in fact, no claim had been made on these items even in the return of income filed by the assessee.
12. The cases cited at the Bar in support of the respective contentions of the parties are considered hereafter :
(a) Hukumchand Mills Ltd. v. CIT  63 ITR 232. The assessee in this case, a resident of Indore, was assessed for the first time as a resident of India for three successive years on and from 1950-51. Previously, the assessee was being assessed as a non-resident in British India. A question arose in the three assessments as to what would be the proper written down value of the buildings, machinery, etc., of the assessee in Indore for calculating depreciation allowance under Section 10(2)(vi) of the Indian I.T. Act, 1922. The assessee contended that the original cost of the said items should be such value as no depreciation had been allowed uptill then on the said items under the Indian I.T. Act. The Revenue contended otherwise. The contention of the assessee was rejected by the ITO and the AAC. Before the Tribunal, a new point was sought to be raised by the Revenue that under the provisions of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, depreciation which had been allowed to the assessee in respect of the said assets under the Industrial Tax Rules which had the force of law in the State of Indore, prior to the integration with India, were required to be deducted in arriving at the written down value thereof. The Tribunal permitted such contention to be raised. The Supreme Court, where the matter was finally disposed of, considered Section 33(4) of the Act of 1922 which provided for appeals to the Tribunal and held that the subject-matter of the appeal before the Tribunal was the question as to what should be the proper written down value of the relevant items and that it was open to the Revenue in the appeal filed before the Tribunal to support the finding of the AAC with regard to the written down value on any other ground. It was held further that the I.T. Rules were procedural in nature and the Tribunal had sufficient power under Section 33(4) of the earlier Act to entertain the contention of the Department and to direct an enquiry on such basis.
(b) CIT v. Mahalakshmi Textile Mills Ltd. : 66ITR710(SC) . In this case, a Bench of the Supreme Court consisting of three learned judges observed as follows (p. 713) :
'Under Sub-section (4) of Section 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is competent to pass such orders on the appeal 'as it thinks fit'. There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the departmental authorities in rejecting a contention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him.'
(c) CIT v. Nelliappan : 66ITR722(SC) . In this case, in assessing income-tax and excess profits tax for the relevant assessment years, the ITO rejected the books of account of the assessee and made several additions to the profits disclosed. The assessments were confirmed by the AAC and the Appellate Tribunal. On a reference, the Madras High Court remanded the case to the Tribunal directing them to determine two limited contentions of the assessee.
At the hearing on remand, the assessee urged before the Tribunal that the cash credits added to the profits should be deleted. The Tribunal rejected the explanation furnished by the assessee of the cash credits and held that they should be treated as income. The Tribunal observed further that, since in the relevant assessment years, the additions have been made to the book profits in excess of the amount of such cash credit, the same should be deleted. The ITO was directed to adjust the tax liability accordingly.
The Revenue sought a reference on the question, inter alia, whether the Tribunal was justified in making out a new case for the assessee inconsistent with the assessee's own plea and interfering with the assessment. The applications under Section 66(1) of the Act of 1922 before the Tribunal and under Section 66(2) thereof before the High Court were rejected.
On appeal, the Supreme Court observed as follows (p. 724) :
'In hearing an appeal, the Tribunal may give leave to the assessee to urge grounds not set forth in the memorandum of appeal, and in deciding the appeal, the Tribunal is not restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. The Tribunal was, therefore, competent to allow the assessees to raise the contention relating to the cash credits which was not made the subject-matter of a ground in the memorandum of appeal. It cannot be said that in accepting the contention of the assessees that the cash credits represented income from the business withheld from the books, the Tribunal made out a new case inconsistent with the assessee's own plea. In any event, the Tribunal is not precluded from adjusting the tax liability of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assessees.'
(d) Addl. CIT v. Gurjargravures P. Ltd. : 111ITR1(SC) . Here, before the AAC, the assessee claimed for the first time relief by way of exemption under Section 84 of the I.T. Act, 1961. Such claim had not been made before the ITO at the assessment nor was there any material on record supporting such a claim except that in a subsequent year such relief had been granted to the assessee. The AAC upheld the assessment and rejected the claim of the assessee on the ground that no exemption under Section 84 had been claimed before the ITO.
On appeal, the Tribunal directed the ITO to allow the relief claimed. The High Court affirmed the decision of the Tribunal. The Supreme Court on a further appeal reversed the decision of the High Court on the ground that there was neither any claim before the ITO for the relief sought for nor any material in support thereof.
The Supreme Court, however, observed as follows (p. 5) :
'We are not here called upon to consider a case where the assessee failed to make a claim though there was evidence on record to support it, or a case where a claim was made but no evidence or insufficient evidence was adduced in support. In the present case neither any claim was made before the Income-tax Officer, nor was there any material on record supporting such a claim.'
(e) CIT v. Gangappa Cables Ltd. : 116ITR778(AP) . In this case, it was claimed by the assessee before the Tribunal for the first time that the expenditure incurred before the assessee went into commercial production were admissible deduction under Section 80J of the I.T. Act, 1961. The Tribunal allowed the question to be raised as the relevant accounts were before the ITO and practically all details for adjudication on the new claim were on record. The decision of the Tribunal was upheld by the Andhra Pradesh High Court, which distinguished Gurjargravures' case : 111ITR1(SC) , on the ground that there were materials on record which could support the claim.
(t) Atlas Cycle Industries Ltd. v. CIT . In this case in an appeal pending before the Tribunal, the assessee sought to raise additional grounds claiming for the first time deduction of expenditure incurred by it under a scheme for giving awards and prizes to its dealers. The Tribunal refused to allow the assessee to raise the additional grounds as the same did not arise out of the order of the AAC under appeal before the Tribunal.
On a reference, the Punjab and Haryana High Court distinguished the decision in Gurjargravures' case : 111ITR1(SC) on facts and held that as it was not in dispute that the assessee had incurred the saiditem of expenditure during the relevant assessment years, the Tribunal ought to have allowed the additional pleas.
(g) Ugar Sugar Works Ltd. v. CIT : 141ITR326(Bom) . In this case, the Bombay High Court noted that the observations of the Supreme Court in the case of Gurjargravures : 111ITR1(SC) were made in respect of the jurisdiction of the AAC in an appeal filed before him. It was noted further that the jurisdiction of the AAC was essentially different from and much wider than that of the Appellate Tribunal. The High Court held that the jurisdiction and powers of the Tribunal were confined to the appeal preferred before it, and the Tribunal could pass orders only on the subject-matter of the appeal.
(h) CIT v. Sri Rajagopal Transports (Pvt.) Ltd. : 144ITR573(Mad) . In this case, the Madras High Court on the facts before it distinguished Gurjargravures' case : 111ITR1(SC) and observed as follows (p. 577) :
'.....as appearing from other observations in that judgment, theSupreme Court was not laying down any opinion on, at least, two other kinds of cases. One is a case where the assessee makes a claim before the assessing authority, but brings no supporting material on record. The other is a case where the material is already there in the assessment record, but the assessee has not made a claim before the assessing authority. Conceivably, these instances cannot be covered by the Supreme Court's decision above cited. It might well be that in both instances, an assessee can very well press a claim before the appellate authority for the first time. .....the claim in this case having been put forward by the assesseeeven at the assessment stage, although at a lesser sum, the claim cannot be shut out in limine at the appellate stage merely because the appellate authority had to go into a larger question in a matter of quantum on the same subject of claim, or because the claim was sought to be put forward from a different angle.'
(i) Bihar Slate Road Transport Corpn. v. CIT : 149ITR208(Patna) . In this case, it was held by the Patna High Court that the Income-tax Appellate Tribunal had jurisdiction to refuse permission to an appellant before it to raise for the first time a new question of fact which could not be investigated without taking further evidence.
In this case, the original appeal was in respect of the charging of interest under Section 217 of the I.T. Act, 1961. An additional ground of appeal was sought to be introduced later claiming that the assessee's income was exempt under Section 11 or the Act.
(j) CIT v. Cellulose Products of India Ltd, : 151ITR499(Guj) [FB]. In this case, the assessee had claimed relief under Section 80J of the I.T.Act, 1961, in the two assessment years involved. The contention of the assessee was that its capital should be apportioned between its new unit, entitled to the benefit of Section 80J, and its old unit on the basis of proportionate fixed assets. The contention was rejected by the ITO who computed on the basis of the actual capital employed in the two units. The assessment was confirmed by the AAC. On further appeal, an additional ground was sought to be raised before the Tribunal as to whether capital should be computed with or without deduction of existing debts and liabilities. The Tribunal allowed the assessee to raise this new ground and remanded the matter to the AAC.
13. On a reference, a Full Bench of the Gujarat High Court held that the Tribunal had jurisdiction to allow the assessee to raise the additional ground and direct fresh adjudication.
14. The Full Bench considered most of the earlier decisions including that in the case of Gurjargrauvres : 111ITR1(SC) and observed as follows (pp. 512-13) :
'When an assessee files an appeal against an assessment order.....The range of appeal extends to the entire range of questions that could be raised at the stage of assessment.....The subject-matter of the appealmay be limited to some part or other of the assessment order to which the assessee really takes objection. Therefore, he would be seeking relief in regard to that matter in relation to which he has objection in the matter of assessment. The scope of relief sought by the assessee in appeal determines the subject-matter of the appeal.....In regard to such subject-matter,if he chooses to make a challenge on grounds other than those raised by him, it would be open to him to seek to urge such grounds. Indeed, it may be possible that he seeks and obtains relief sought by him in the appeal by a different approach..... If the subject-matter remains the same, thenew case presented by him to obtain relief sought in respect of such subject-matter should be permitted.....When such a plea is not before theAppellate Tribunal when the appeal is filed, but is raised later, the question whether it should be allowed or not is a matter of discretion as mentioned. The fact that the assessee had failed to make the approach, which he makes before the Tribunal, before the first appellate authority should not in any way preclude him from making that approach.'
15. The additional grounds of appeal which were sought to be raised by the assessee in the instant case, ex facie, relate to its claim under Section 35B of the I.T. Act, 1961, which provides for a special export markets development allowance. It is a matter of record that the assessee had made a claim before the ITO under the same Section 35B in respect of particular items of expenditure. The ITO allowed some of the items and rejected the others. In the appeal before the AAC, claims under the said section were pursued and the assessee had obtained relief under the said section in respect of other items. In the further appeal before the Appellate Tribunal, claim was again made under the same section where several new items relating to the same claim which had not been pressed in the earlier proceedings were sought to be introduced.
16. It cannot be said that the claim of the assessee was a new claim. In our view, the assessee has sought only to enhance or expand its original claim by including therein other items.
17. We accept the contention of the assessee that the new items claimed were supported by the evidence on record as they were included in the statement of accounts filed before the ITO. Deduction had been sought for expenditure incurred for the said items under Section 37 of the Act.
18. We hold that the decision of the Supreme Court in Gurjargravures' case : 111ITR1(SC) has no application to the facts before us. Following the decision of the Supreme Court in Hukumchand Jute Mills Ltd.'s case : 63ITR232(SC) , we hold that the subject-matter of the appeal before the Tribunal was the claim of the assessee under Section 35B of the said Act in which the assessee was entitled to include new items. We agree with respect with the view expressed by a Full Bench of the Gujarat High Court in Cellulose Products oj India Ltd.'s case : 151ITR499(Guj) , that the subject matter of the appeal is a relevant factor to be considered when additional grounds are sought to be raised in an appeal.
19. For the above reasons, we answer question No. 1 in the negative and in favour of the assessee. In view of our answer to question No. 1, no answer is called for question No. 2 and we decline to answer the same.
20. There will be no order as to costs.
Ajit K. Sengupta, J.
21. I agree.