TMI Blog2005 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the facts and circumstances of the case and in law the CIT(A) has erred in upholding the disallowance amounting to Rs. 11,40,000 representing genuine business expenditure of rent. 4. On the facts and circumstances of the case and in law the CIT(A) has erred in upholding the levy of interest under ss. 234B and 234C of the IT Act, 1961 by the learned AO. Ground Nos. 1 and 2: 3. The learned counsel of the assessee pointed out that in this case originally the assessment was completed on 30th Jan., 1996, a copy of that order is placed at pp. 13 to 15 of the paper book. The assessee was aggrieved by certain additions and matter was taken in appeal before the CIT(A) who passed his order on 31st Dec., 1996, copy of which has been placed at pp. 16 to 18 of the paper book. It was pointed out that CIT(A) set aside the order in respect of ground No. 2, which was regarding disallowance of net amount of Rs. 11,40,000 for the further examination by AO. Additions made by AO for which ground Nos. 3 and 4 were raised before CIT(A) were not allowed and additions were confirmed. In pursuance of this order, AO passed an appeal effect order under s. 250, copy of which has been filed at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Asstt. CIT vs. Smt. Kamakshidevi Avaru (1993) 46 ITD 491 (Bang). It was also pointed out that misconceived action of the AO has created a legal paradox and the assessment has been done twice. First under s. 143(3) vide order dt. 3rd Jan., 1996 read with order under s. 250, dt. 3rd March, 1997 and again under s. 143(3) vide another order dt. 3rd Feb., 1999. It was also contended that AO could have passed only one order under s. 250 to amend his order dt. 29th March, 1996. He again referred to p. 69, which is a copy of the appeal effect order and submitted that from the last line it is evident, that even notice of demand and challan was also directed to be issued by the AO. In this background, the second order passed under s. 143(3) dt. 3rd Feb., 1999 is bad in law and required to be quashed because the same is without jurisdiction. The jurisdiction of AO was ousted the moment the appeal effect order was passed on 3rd March, 1997. 4. At this stage Bench raised three specific queries from the learned counsel of the assessee, which are as under: (1) What is the procedure prescribed under the IT Act, 1961 for passing appeal effect order? (2) If certain additions are confirmed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be given at that point so that the demand which has become final can be recovered and the issues which have not become final and have to be re-examined are separately examined. By following this instruction, no harm can be said to have been caused to the assessee and, therefore, assessee should have no grievance against following of such a procedure. 7. We have considered the rival submissions carefully and have gone through the relevant material on record. We have examined this issue in detail because we could not find any precedent whereby matter was decided one way or other. The short and important question to be decided in this ground is whether AO can pass the appeal effect order in more than one part or not. We find that no particular procedure has been given in the Act or Rules to carry out the appeal effect. Wherever no particular procedure has been given in the Act or Rules then naturally the authorities have to adopt a procedure or practice, which is practical, adheres to well-settled legal principle and does not cause prejudice to the assessee or the Government. We think, to render justice one of the basic principles in the administration of justice in our count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter is merely advisory. After deciding the question of law referred to it the Court advises the Tribunal of its decision thereon and leaves it to the Tribunal to dispose of the case in conformity of such decision. Following this principle it can be seen that similarly AO is bound to pass an order in conformity of the orders passed by the first appellate authority or the Tribunal which in common parlance is known as "appeal effect order". 9. However, where on appeal from an assessment order, the first appellate authority set aside the assessment and directs the AO to make fresh assessment. AO is bound by such directions of the first appellate authority in making the fresh assessment. He is bound by any directions which may be given by the first appellate authority but at the same time AO would enjoy the same powers in framing a fresh assessment as he originally enjoys while making assessment under s. 143(3). Now it can be easily seen that there is no difficulty if all the additions are confirmed or deleted or the whole of the order is set aside for fresh consideration by the AO by the first appellate authority. Difficulties would arise only where some of the additions are confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority. 10. We would have been in agreement with the contention of the learned counsel of the assessee that piecemeal assessment is not possible had this been the case of original assessment. Piecemeal assessment is not possible under s. 143(3) but however while giving appeal effect in the kind of situation before us the AO is performing two functions namely, carrying out of the directions of the appellate authority in respect of the issues which have become final and secondly re-examining the issues which have been set aside to him. Each of these functions seems to be independent and there is no bar in the Act to carry out these functions separately. We also find no infirmity in the practice being followed by the Revenue authority in passing the separate appeal effect order by firstly giving appeal effect order in respect of issues which have become final and passing the second order in respect of the issues which have to be examined afresh. Such kind of practice seems to be more practical and convenient to both the parties and there is no legal bar against such a practice. 11. We also find no merit in the contention that assessee would lose right of appeal if two orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessing authority refuses to carry out the directions which its superior Tribunal has given the same would amount to denial of justice. He has also referred to the decision of Lakshman Prakash vs. CIT (1963) 48 ITR 705 (All)(FB). He then referred to the CIT(A)'s order at pp. 16 to 18 of the paper book and submitted that when matter was set aside in the first round, assessee had already vacated the premises and no fruitful purpose would have been achieved because assessee was no more in possession of such premises. He then submitted that assessee had hired the premises in New Friends Colony, Shahdara, which is an industrial colony for godown purposes. It was not disputed by the Revenue authorities that premises were actually taken on rent. He argued that premises were located in industrial colony, Shahdara and the same could not have been possibly used for personal purpose and even there is no allegation by the Revenue that the same were used for personal purpose. He submitted that assessee had made a business plan by which these premises were taken on rent and later on the business plan was changed and, therefore, these premises were vacated. According to him these premises wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; (b) any sums paid on account of land revenue, local rates or municipal taxes; (c) the amount of any premium paid in respect of insurance against risk of damage or destruction of the premises." 17. A plain reading of the section would show that rent, rates, taxes, repairs and insurance for premises, which have been occupied by the assessee and used for the business purpose has to be allowed as business expenditure. Clearly the emphasis is on the word 'occupied' which means once the premises are taken on rent and are occupied then rent has to be allowed. It is not the case of Revenue that premises were used for personal purposes because the same are located in New Friends Colony, Shahdara, which is an industrial colony. From the vouchers filed before us it becomes clear that employees of the assessee-company have been visiting this godown and some repairs and maintenances were also incurred on account of this godown. Even if it is assumed that goods were not stored in this godown but still rent cannot be disallowed because passive user is sufficient and premises were actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult, the appeals are dismissed. ITA No. 931/Del/2000 23. In this appeal the Revenue has raised the following ground: "On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 92,17,810 made by the AO on account of lowering of prices of the goods sold to M/s Dabur India Ltd." 24. After hearing both the parties we find this issue is covered in favour of the assessee, by the order of Tribunal for asst. yr. 1992-93 vide consolidated order in ITA No. 2294/1994 and ITA No. 3143/1994 vide paras 2 to 12 and, therefore, following that decision we decide this issue in favour of the assessee. 25. In the result, the appeal is dismissed. ITA No. 932/Del/2000 26. In this appeal the Revenue has raised the following ground: "On the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 17,13,633 made by the AO on account of lowering of prices of the goods sold to M/s Dabur India Ltd." 27. After hearing both the parties we find this issue is covered in favour of the assessee, by the order of Tribunal for asst. yr. 1992-93 vide consolidated order in ITA No. 2294/1994 and ITA No. 314 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the first two quarters of the year which averages Rs. 200 lakhs per month." Ground Nos. 1 and 2: 31. After hearing both the parties we find this issue is covered in favour of assessee by the decisions of Tribunal in the earlier years as well as decision of Hon'ble Madhya Pradesh High Court in the case of J.P. Tobacco Products (P) Ltd. vs. CIT (1997) 140 CTR (MP) 329 : (1998) 229 ITR 123 (MP) and, therefore, the same is decided against the Revenue. Ground Nos. 3 to 6: 32. After hearing both the parties we find that this issue is covered in favour of the assessee by the order of Tribunal for asst. yr. 1992-93 in ITA No. 3143/1994 and, therefore, we decide this issue against the Revenue. 33. In the result, the appeal is dismissed. ITA No. 1429/Del/2000 34. In this appeal the assessee has raised the following grounds: 1. On the facts and circumstances of the case and in law, the CIT(A) has failed to appreciate the facts in proper perspective in upholding the wrong computation of deduction under s. 80-I of the IT Act, 1961 made by the learned AO. 35. After hearing both the parties we find that originally the assessee had raised the issue regarding allowability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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