1983 (7) TMI 81 - AT - Income Tax

Summary

Issues Involved:
1. Allowability of depreciation and development rebate on additional liability due to exchange rate differences.
2. Authorization and validity of the application filed by the revenue.
3. Admissibility of new claims before the Tribunal.
4. Rectification of the Tribunal's order.

Detailed Analysis:

1. Allowability of Depreciation and Development Rebate on Additional Liability Due to Exchange Rate Differences:
The primary issue was the allowability of depreciation and development rebate on additional liability incurred due to exchange rate differences. The Commissioner (Appeals) initially directed the ITO to allow depreciation on an additional liability of Rs. 3,70,998. The Tribunal, however, accepted the assessee's claim that depreciation and development rebate should be allowed on a sum of Rs. 23,61,713, as the liability had increased to this extent due to exchange rate differences. The revenue contended that this was a new position not examined by the lower authorities, and thus, the Tribunal should not have allowed this claim.

2. Authorization and Validity of the Application Filed by the Revenue:
The assessee's representative objected to the application, claiming it was unauthorized since it was signed by Shri N.K. Nayak, a senior authorized representative, rather than by the ITO or Shri K. Subbarao, who represented the department during the main appeal. The Tribunal found no substance in this objection, noting that all representatives, including S/Shri K. Subbarao, N.K. Nayak, and S.P. Chaliha, were duly authorized by the Central Government to appear, plead, and act on behalf of the income-tax authorities. Therefore, the application signed by Shri N.K. Nayak was deemed authorized.

3. Admissibility of New Claims Before the Tribunal:
The Tribunal allowed the assessee to argue for depreciation and development rebate on the higher amount before it, even though this claim was not considered by the lower authorities. The Tribunal noted that the assessee had raised this claim before the Commissioner (Appeals) but it was not addressed. The Tribunal referred to the Andhra Pradesh High Court decision in CIT v. Gangappa Cables Ltd., which held that the Tribunal has the power to allow new claims if there is sufficient material on record. However, the Tribunal acknowledged that if the matter had been argued more thoroughly initially, it might not have permitted the claim for additional depreciation due to the lack of consideration by the lower authorities and the absence of material evidence.

4. Rectification of the Tribunal's Order:
The Tribunal recognized a mistake in its order, as it relied on a chart showing increased liability due to devaluation, which was not verified by the lower authorities. The Tribunal concluded that verification of figures was necessary and that the claim should be reconsidered by the ITO. The Tribunal amended its order to direct the ITO to verify the assessee's claim for depreciation and development rebate on the enhanced cost, in light of the observations made in the order. The Tribunal emphasized that it could not review its order but could rectify mistakes apparent from the record.

Conclusion:
The Tribunal allowed the application for rectification to the extent of directing the ITO to verify the assessee's claim for depreciation and development rebate on the enhanced cost due to exchange rate differences. The Tribunal clarified that the discussion regarding development rebate in the original order was confined to the additional liability of Rs. 3,70,998 and did not cover the enhanced cost of Rs. 23,61,713. The application was allowed in the manner indicated, ensuring that the matter would be reconsidered by the ITO based on proper verification.