TMI Blog2001 (9) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of exemption permissible under section 10(29). He should have appreciated that different courts held different views with respect to allowability of total expenditure against income other than exempted income, making the issue of arriving at the total income of the corporation a debatable one. Hence, such adjustment cannot be carried out as prima facie adjustment under section 143(1)(a). 4. The learned Commissioner of Income-tax is incorrect in upholding the levy of additional tax of Rs.4,24,923. 5. Without prejudice to the foregoing contentions, it is submitted that the learned,Commission of Income-tax is incorrect in upholding that the income of the Corporation other than Warehousing income is taxable. He should have appreciated that the appellant-corporation will be entitled to deduction in respect of proportionate expenditure to income other than Warehousing income. 6. For these and other grounds that may be urged at the time of hearing of the appeal, the appellant-corporation prays that the order of the learned Commissioner of Income-tax, be set aside and modified as may be deemed fit.' At the time of hearing, the learned counsel for the assessee has submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Warehousing Corporation Act, 1962, with the object of providing warehousing facilities to the agricultural produce in the State of Andhra Pradesh. The shareholders are the State Govt. of Andhra Pradesh and the Central Warehousing Corporation. The assessee-corporation filed its return of income for the assessment year 1993-94 on 31-12-1993, declaring 'nil' income. While doing so, the assessee-corporation mentioned in the note attached to the return of income that all the income earned by the Corporation in the course of letting out godowns and warehouses for storage, processing or facilitating the marketing of commodities and that the activity of the Corporation is an integrated one. It had admitted in the note that in the Income-tax Assessments in the earlier years, warehousing income was segregated from the income from Supervisory Charges and Interest of Fixed Deposits and the income by way of Interest and Supervisory Charges was taxed under the head "Income from other sources" by allowing proportionate expenditure. While making its claims for exemption under section 10(29) and also its claim for exemption under section 11, the assessee-corporation stated that the matters are in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed'. Our attention has been drawn to a decision of this court in Orissa State Warehousing Corporation v. CIT[1999] 237 ITR 589 which has taken somewhat different view particularly, with regard to the interest income. We find a conflict between decisions on which earlier special leave petitions were dism issed and Orissa State Warehousing Corporation v. CIT [1999] 237 ITR 589 (SC). Accordingly, this matter may be placed before the Hon'ble the Chief Justice for directions for placing the matter before a larger Bench for decision." It is clear from the judgment of the Apex Court that they are conflicting judgment of the Apex Court in this matter. In this context, we refer to the judgment of this Bench of the Tribunal in the case of Justice Sri Motilal B. Naik v. Asstt. CIT[2001] 77 ITD 285, wherein it was held as follows: "We again repeat that the issue exactly to be decided by us in this appeal is not the question of taxability of the disputed receipts but its amenability to prima facie adjustment under section 143(1)(a) of the Act. Regarding the substantial question whether the receipts are taxable or not, perhaps the Assessing Officer could be armed with the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. No. 500/ Hyd./1997, Order dated 18-5-2001, considering the prima facie adjustment made by the Assessing Officer by following the judgment of the Jurisdictional High Court, held thus: "For the foregoing reasons, we hold that the issue relating to allowability of deduction out of incentive bonus received by a Development Officer of LIC of India continues to be a debatable one, notwithstanding the decision of the A.P. High Court in the case of B. Chinnaiah Others, and consequently no prima facie adjustment in terms of section 143(1)(a) could be made in relation to such a debatable issue. When there is a divergence of opinion among High Courts, the assessee, to our mind, cannot reasonably be expected to include in the return filed by him as part of the total income, an item of income which according to him is not taxable. If he so includes, he is debarred from agitating the issue in higher appellate forum. No taxpayer can be so debarred from approaching the Apex Court. While the judgment of the Jurisdictional High Court is a binding decision in a regular assessment, the Department cannot take shelter being the judgment and hold that the issue is no longer debatable and thus fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, hold that the impugned adjustments are beyond the scope of section 143(1)(a). They are accordingly deleted.' We are in full agreement with the aforesaid decision of the Tribunal. 7. Hence, on a careful examination of all the issues involved, we are of the considered opinion that the issue in question is a debatable and it is beyond the jurisdiction of the Assessing Officer to make huge adjustments of this nature as prima facie adjustments under section 143(1)(a) of the Income-tax Act, 1961, especially in view of the judgment of the Honourable Supreme Court that the matter be placed before the larger Bench in view of the conflicting judgment of the Honourable Supreme Court and also in view of the fact that the reference applications in the assessee's own case are pending before the Honourable High Court. If such prima facie adjustments are upheld, it would result in the levy of additional tax to the tune of Rs.4,24,923, which on the facts and in the circumstances of the case appears highly unjustified. Permitting such prima facie adjustments would result in punishing or penalising the assessee, who strongly believes and pursues a cause, in which he feels he would ult ..... X X X X Extracts X X X X X X X X Extracts X X X X
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