TMI Blog2005 (1) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... itiate action u/s 147 if it was of the view that notional truck hire income was also liable to be taxed, which had not been taxed by the Assessing Officer in the original assessment. Thus, we hold that the CIT(A) had no jurisdiction to give direction to the Assessing Officer to tax the hire charges income and late fee income in the hands of the assessee. We therefore, hold that on merit no addition is called for on account of such hire charges income. As a result, the first ground taken by the assessee is allowed. Allowed Deprecation on leased truck and prove the ownership of truck:- The lessee stopped paying the rent and they did not return the trucks as well. Due to this reason the assessee did not offer any lease rental income in its return. However, since the assets continued to remain employed in leasing business, the assessee continued to claim depreciation on the said leased trucks amounting to Rs. 14,48,353. The learned Departmental Representative read over the relevant portion of the order of the Assessing Officer to support his argument. At this stage, attention of the learned Departmental Representative was drawn by the Bench to the apparent contradiction in the stand ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability, on its accrual, even if not paid or extactly quantified, during the year, is too well settled to necessitate citing plethora of judgments which have been relied and mentioned in the legal note submitted by the learned counsel of the assessee. The assessee has also referred to numerous judgments and various aspects especially the judgment of the Hon ble Supreme Court in the case of Calcutta Co. Ltd. v. CIT [ 1959 (5) TMI 3 - SUPREME COURT] , is worth mentioning. Thus, expenditure for repairs is clearly allowable. Accordingly, the Assessing Officer is directed to allow the same. We may make it clear that if at all, subsequently, the liability of the assessee is found to be less than claimed and allowed in this year, the department will be free to bring to tax the difference in accordance with the law. In this way, interest of the revenue is adequately safeguarded. Addition on account of licence fee - Assessing Officer is not competent to raise a new issue while giving effect to a specific direction given by the CIT(A). We are of the opinion that this issue requires examination on merit also. Therefore, issue was set aside and restored back to the file of the CIT(A) to decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the assessee had raised these two grounds specifically before the CIT(A). However, the CIT(A) has not dealt with the two grounds and this was the reason that while filing the appeal before the Hon ble ITAT, through oversight these two grounds remained to be incorporated. It is submitted that as far as the fourth ground regarding license fees is concerned, the assessee had filed rectification petition urging the CIT(A) to dispose of this ground that remained to be disposed of by the CIT(A). The assessee was under bona fide , though mistaken belief that as the ground was not adjudicated by the CIT(A), the course open was to first file rectification letter before the CIT(A) and carry the matter further only if the leaned CIT(A) refused to entertain this application. Lastly it is submitted that for adjudicating these two grounds no complicated fresh facts are required to be gone into and these grounds can be disposed of on the basis of facts already on record. Accordingly, we have perused the grounds taken before the CIT(A) and it is found that the assessee had actually raised these two grounds before the CIT(A) but the same were not disposed of. In the case of Byra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as discussed Rs. 14,19,078 Rs. 14,48,353/ Rs. 21,17,274 Rs. (-) 5,57,13,158 Add.- Deduction disallowed as discussed Rs. 9,87,32,500 Total income-tax Rs. 4,30,19,342 Aggrieved by the order the assessee filed appeal before the CIT(A). The learned CIT(A) disposed of the appeal on 13-11-1996, and upheld the decision of the Assessing Officer in respect of disallowance of repair expenditure but restored the issue of claim of depreciation of Rs. 14,48,353 which was disallowed by the Assessing Officer. The assessee carried the matter further before the ITAT and the Tribunal vide its order dated 18-12-1997 set aside the issue of claim of repair expenses to the file of the Assessing Officer. The Tribunal did not express any opinion on deductibility and the lability in respect of repair expenses. The Assessing Officer was left free to examine the issue from all angles and decide the matter de novo . 4. In the set aside proceedings, the Assessing Officer adjudicated the issues relating to the claim of depreciation as well as the claim of repair expenses. The Assessing Officer completed the assessment on 25-3-1999 and repeated the disallowance of depreciation of Rs. 14,48,353 and repair expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership over the asset by the assessee was referred back. The department did not challenge the decision of the CIT(A). While re- deciding the issue of depreciation the Assessing Officer required the assessee to file certain details on the failure on the part of the assessee to file the details to the satisfaction of the Assessing Officer, depreciation was again disallowed. Therefore, the assessee went in appeal to the CIT(A) for the second time on the issue of depreciation. It is at this second stage the CIT(A) touched the issue of taxability of hire charges income and late payment fees for the first time by issuing notice under section 251 of the Income-tax Act. 6. The learned counsel submitted that the learned CIT(A) did not have the requisite jurisdiction to touch this issue of taxing hire charges income and late fee for the first time in the second inning of the appeal. It is submitted that since the Assessing Officer had no jurisdiction to make any addition on account of hire charges, the CIT(A) in course of exercising his appellate jurisdiction under section 251 cannot seek to give direction to the Assessing Officer to tax such income. The learned counsel submitted that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered opinion the Assessing Officer was duty bound to confine his verification to this extent and actually he has confined himself to that. If the Assessing Officer lacks jurisdiction to do so, we fail to understand how the CIT(A) could have usurped the jurisdiction. There is no denying fact that the power of the CIT(A) in the course of its appellate jurisdiction are co-terminous with the powers of the Assessing Officer, and the CIT(A) can do what the Assessing Officer could does but has not done, this applies in a reverse way as well. In other words, the CIT(A) cannot do what the Assessing Officer could not have done. He does not get the jurisdiction to do certain act for which the Assessing Officer did not have the jurisdiction. In the present case, in second round the jurisdiction of the Assessing Officer was limited to the issue of ownership of assets and nothing else. In the present case nothing prevented the department to initiate revision proceeding under section 263 or to initiate action under section 147 if it was of the view that notional truck hire income was also liable to be taxed, which had not been taxed by the Assessing Officer in the original assessment. Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such trucks. On our query how to reconcile the two different stands taken by the department, the learned Departmental Representative submitted that he sticks to the decision of the Assessing Officer. 11. We have carefully considered the submissions and facts of the facts. In any case the assessee has submitted the lease agreement before the Assessing Officer and has submitted registration certificate before CIT(A) in the name of the assessee to prove that its ownership over the trucks. Unfortunately, the learned CIT(A) after accepting these evidence and recording this fact, did not conclude the matter further. Under these circumstances, we are of the view that the issue should go back to the CIT(A) to decide the ground taken by the assessee. Accordingly, we set aside the matter back to the file of the CIT(A) to adjudicate the same. 12. Ground No. 3 This ground is against the disallowance of the claim of Rs. 9,87,32,500 on account of repairs damage of the building owned by it. The learned counsel appearing on behalf of the assessee submitted that when the original assessment was completed on 27-12-1995 under section 143(3), the Assessing Officer disallowed the claim on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hotel Ltd. against the assessee-company before the Hon ble Bombay High Court and also a copy of the letter dated 17-9-1993 addressed by the assessee company to M/s. I.T.C. Hotels Ltd. on the subject and pleaded that the liability for undertaking renovation work may be of M/s. I.T.C. Hotels Ltd. and not of the assessee and so, the assessee is not entitled for the deduction of Rs. 9,87,32,500. In view of the above, ultimately the issue was set aside to the file of the Assessing Officer to decide the matter de novo . It is submitted that the while completing fresh assessment in pursuance of the order of ITAT, the Assessing Officer took altogether a different stand from the stand taken by the Departmental Representative before the Tribunal. The Assessing Officer has observed in his order that the only issue for consideration here is whether the liability claimed by the assessee had accrued or not. Further the issue of liability of repair and maintenance is one of the several disputed issues pending before the Hon ble High Court. Therefore, it is neither proper nor necessary to go into this question. Hence, the Assessing Officer restricted himself to the question of allowability or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e responsibility and the obligation of the assessee, as owner of the said hotel, to carry out the repairs work so as to restore the said hotel to a good and proper condition to enable ITC to continue operating the said hotel and render services as contemplated by the operating license agreement in the same manner as it did before the bomb blast and such responsibility was on the assessee alone. 13. It was further submitted that it was specifically averred that the assessee had admitted its liability and had agreed to carry out the repairs in Interim Petition No. 60 of 1994 taken out by the assessee in the Arbitration Suit No. 3885 of 1993. The learned AR submitted that the receiver was appointed by the High Court for this purpose and the actual work was being done by the assessee. These specific and categorical averments made by M/s. ITC were duly supported by the various letters exchanged by the assessee and M/s. ITC. On the basis of these facts it is submitted that it is undisputed fact that the assessee being the owner of the hotel was primarily responsible for carrying out the repairs. It was only that the assessee was seeking to get reimbursement from M/s. ITC and ITC had clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led exhaustive legal note, citing and summarizing ratios laid down by the Supreme Court as well as by the High Courts. These decisions are as under : ( a ) Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC) ( b ) Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 (SC) ( c ) Laxmi Ginning Oil Mills v. CIT [1971] 82 ITR 958 (Punj. Har.) ( d ) CIT v. Burhwal Sugar Mills Co. Ltd. [1971] 82 ITR 784 (All.) ( e ) CIT v. Sugar Dealers [1975] 100 ITR 424 (All.) ( f ) Kundan Sugar Mills v. CIT [1977] 106 ITR 704 (All.) ( g ) CIT v. Kerala Transport Co. [1999] 239 ITR 183 (Ker.) ( h ) George Maijo Co. v. CIT [2003] 261 ITR 231 (Mad.) ( i ) Welding Rods Mfg. Co. Ltd. v. CIT [1997] 225 ITR 525 (Guj.) ( j ) CIT v. Tulsiram Karamchand [1994] 52 ITD 180 (Pune) ( k ) Yadav Transport Service v. ITO [1988] 30 TTJ (Jp.) 429. 15. To support the argument that whether the liability is disputed is still the same and are to be allowed, the learned counsel has cited the following decisions : ( a ) Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) ( b ) CIT v. Central Provinces Manganese Ore Co. Ltd. [1978] 112 ITR 734 (Bom.) ( c ) CIT v. Investigation Security Service (India) (P.) Ltd. [1990] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was in fact, thinking of winding up. The learned Departmental Representative submitted that the conduct and the intention of the assessee can be gauged from the fact that inspite of earning heavy income of the assessee had not paid advance tax, which according to the Departmental Representative shows that the claim of the assessee was not bona fide . Therefore, he submitted that the claim of the assessee deserved to be rejected. In a rejoinder, the learned counsel submitted that non-payment of advance tax was solely due to the internal disputes, which had led to injunction obtained by one ground against others for operation of bank accounts. In any case, the learned counsel strongly refuted the allegation that this had anything to do with the claim. According to him, it is preposterous to even thing that the assessee had anticipated the bomb blast which gripped the entire Mumbai city, that too, in the last month of the accounting year, and would have anticipated one of such bomb blast at its hotel which, in turn, would require extensive repairs expenses and would enable the assessee to claim the same and deduction so as to avoid payment of advance tax. 17. We have consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact. As such, it is evident that, ultimately, the assessee had accepted the responsibility to carry out the work, which it did under the supervision of the Court Receiver. As against these hard evidences, no cogent evidence has been brought on record by the department. In fact, because there was initial delay on part of the assessee to carry out the repairs, M/s. ITC filed a suit against the assessee, demanding compensation of around Rs. 117 crores on account of loss of profit and loss of business and reputation. Even otherwise, the fact that the damage had already been done and the loss had been incurred is not disputed. The fact that the liability to carry out the repairs, required to restore the business to its normalcy, had already arisen is also not disputed. Even the amount of the claim is not based on any guess work. It is properly evaluated in a scientific manner by reputed engineers and contractors. The work is being carried out by the assessee under the supervision of the High Court, through its Court Receiver. Under these circumstances, we do not see what remains to be proved for allowance of the claim. In fact, the Act itself has made it clear that even if a liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer on account of licence fee receivable from M/s. ITC. This issue has been raised as an additional ground. The learned counsel submitted that this addition has been made by the Assessing Officer for the first time in the fresh assessment order giving effect to the order of the CIT(A) on the issue of allowability of depreciation. He further submitted that the Assessing Officer did not have any jurisdiction to move beyond the specific and narrow scope of direction given by the CIT(A), much less to add an entirely new source of income which was neither a subject-matter of the earlier assessment order nor of the appeal order. He further submitted that this issue was specifically raised before the CIT(A), but the learned CIT(A) had not dealt with the same. On the other hand, the learned Departmental Representative submitted that since the learned CIT(A) has not dealt with the relevant ground taken by the assessee, this issue may be restored back to the file of the CIT(A). 19. We have considered the submissions and have perused the orders of the authorities below. We find that while giving effect to the order of the CIT(A), the Assessing Officer has taken up this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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