9911796707
TMI Blog2012 (5) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in the present case are different from that of the aforesaid case. 4. The Commissioner (Appeals) failed to appreciate that the appellant is covered by the definition of the term "infrastructure facility" given in Explanation to section 80IA(4)(i) of the Act as "Ports". 5. The Commissioner (Appeals) erred in not following circular No. 793 dated 23rd June, 2000 and clarification dated 16th December, 2005 issued by the CBDT which is binding on the Income Tax Authorities. 6. The Commissioner (Appeals) failed to appreciate that sub-clause (aa) of section 7 of the Customs Act, 1962 clarifies that the Customs Ports are the places which are identified and demarcated for the unloading of imported cargo and the loading of exported cargo and, therefore, the Container Freight Stations would be Customs Ports with reference to the Customs Law and, therefore, it would be qualified for the benefit of section 80-IA(4)(i) of the Act. 7. In the alternative and without prejudice, the Commissioner (Appeals) failed to appreciate that the Container Freight Station is an Inland Port and therefore, it is an infrastructure facility within the meaning of section 80-IA(4) of the Act. 8. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) in a tabular form, which is reproduced below to the extent it is relevant to us : Form No. 36 Form No.35 Grounds of Appeal Grounds of Appeal 1 Disallowance on Deduction u/s 80IA (4) of Rs. 1,25,77,537/- On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating that the order passed by the Assessing Officer is without jurisdiction and bad in law as the jurisdiction u/s 153A is vitiated The Learned DCIT erred in disallowing the claim of deduction u/s 80IA 4) of Rs. 1,25,77,637 on the reasoning that Container Freight Station (CFS) are not Inland Ports The Commissioner (Appeals) erred in confirming the disallowance of deduction of Rs. 1,25,77,637/- u/s 80IA(4) of the Act 2. The Learned DCIT erred in disallowing the claim of deduction u/s 80IA(4) relying on a Delhi ITAT order in the case of Container Corporation of India case reported in 30 SOT 284 (Delhi) The CIT(A) erred in relying on the decision of the Appellate Tribunal in the case of Container Corporation on India Ltd. v. ACIT [30 SOT 284 (Delhi), without appreciating that the facts in the present case are different from that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that an order of assessment for this year was made earlier by the AO u/s 143 (3) prior to the conduct of search u/s 132(1) on or about 26.4.2007. This is evident from the submissions of the assessee made before the Ld. CIT(A) recorded in paragraph No. 3.4 where it is submitted that in the original assessment order passed u/s 143(3), deduction u/s 80IA(4) was allowed by the AO in various years. The facts and circumstances in so far as deduction u/s 80IA(4) is concerned remain the same, therefore, the AO was not justified in changing the stand taken by his predecessor on the basis of the decision of the Tribunal in the case of Container corporation of India Limited v. ACIT [2009] 30 SOT 284 (Delhi). The division bench considered this matter which is evident from the fact that in the reference made to Hon'ble President, ITAT, it is inter alia mentioned in paragraph 4 that the decision in the case of Container Corporation of India Ltd., according to the assessee, is not applicable to the facts of his case because the Tribunal considered the admissibility of the deduction in the case of Inland Container Depot ("ICD" for short) and not in the case of a Container Freight Station ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had no right to raise the question of limitation by way of additional ground as such ground could have been initially taken before the AO. He relied upon decision in the case of Hindustan Times Ltd. s. Union of India AIR 1998 (SC) 688. On hearing both the parties and considering relevant material on record, the Hon'ble Tribunal observed that during the course of original hearing before the Division Bench, the assessee had raised the question of limitation by way of additional ground. The revenue approached Hon'ble President for the constitution of Special Bench for deciding the controversy as there were conflicting views in the matter. Therefore, the special bench was constituted to decide the question. It has been held that it is too late in the day for the revenue to object to the legality of admission of additional ground at this stage, because the special bench has been constituted for disposing off this very controversy and that too at the instance of the revenue. It has been further held that the question of limitation goes up the very root of the matter. If the proceedings are initiated or completed beyond the prescribed time, then such proceedings deserve to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the respondent, though he may not have filed appeal, may support the order of the Appellate Assistant Commissioner on any of the grounds decided against him. These are the relevant provisions relating to the question that arises for consideration. Having regard to these provisions, it can be mentioned that the subject matter of appeal would be the grounds specifically raised in the memorandum of appeal, grounds which Tribunal allows the appellant to raise, and contentions raised by the Respondent in support of the order made by the appellate Assistant Commissioner challenging the adverse findings against him. The scope and ambit of these rules have been considered by the court in ITR No. 50 of 1959 (Commissioner of Income Tax v. M/s Hazarimal Nagji & Co. [1962] 46 ITR 1168, decided on 6th October, 1961, wherein it has been observed :- 'Now, reading the provisions of section 33(4) and the relevant rules to which our attention has been drawn by Mr. Joshi, it seems to us that the powers of the Appellate Tribunal are similar to the powers of the appellate court under the Civil Procedure Code. That also is the view which this court has taken in New India Life Assurance Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowly. 3.6 Ld. Counsel also dealt with the written submissions dated 3.5.2012 and 7.5.2012 filed by the revenue. 4. In reply, the Ld. Standing Counsel submits that the decision in the case of NTPC has to be read in the context of the facts of that case. The facts are that the assessee had deposited surplus funds with banks as short - term deposits. The interest received in the relevant year on such deposits, amounting to Rs. 22,84,994/-, was offered for tax and the assessment was completed accordingly. Before the Ld. CIT(A), a number of grounds were taken by the assessee but the inclusion of aforesaid amount in the total income was neither challenged by the assessee nor considered by the Ld. CIT(A). The assessee filed appeal before the Tribunal against the order of the Ld. CIT(A), in which the inclusion of the amount of Rs. 22,84,994/- was not objected to in the memorandum of appeal. However, in letter dated 16.7.1983, the assessee took three additional grounds to effect that the aforesaid amount ought to be deducted from the expenditure incurred during construction and it cannot be included in the total income. It was explained that the grounds have been taken on account of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof, which do not require any further investigation or verification. 4.2 Further, he relied on the decision of Hon'ble Bombay High Court in the case of Pokhraj Hirachand (1963) 49 ITR 293. Briefly speaking, the facts are that the question raised before the Tribunal was - whether, payment made by the assessee to Milkhi Ram R Goyal was capital or revenue in nature? The Tribunal held that the payment is revenue in nature. Further the Tribunal held that the entire amount has not been paid to Milkhi Ram but only a part thereof has been paid, therefore, the deduction was allowed only for that part of the payment which had been actually made. The Hon'ble court held that in the statement of the case, the Tribunal had not stated that the departmental representative or the Income Tax Officer had raised any contention in respect of quantum of payment before it. If it is the correct position that the Income Tax Officer or the departmental representative had raised any such contention before the Tribunal, it will be a reasonable to assume that the Commissioner would have seen that this fact is incorporated in the statement of the case. This being the position on record, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t noticed at the time of conducting the search. The sum of Rs. 26,85,820/- consists of Rs. 23,05,528/- disallowed by the AO on account of conveyance and other expenses in the original assessment made u/s 143(3) on 30.12.2006, and the balance of Rs. 3,80,292/- is on account of reduction in the claim made u/s 80IA. The revenue does not have objection to the decision regarding deduction u/s 80IA(4) on merits. However, if the order u/s 153A is held to be beyond jurisdiction, the incomes offered by the assessee suo moto in the return will also get deleted as status quo ante shall prevail. Such a position cannot be allowed to be obtained in view of the decision of Hon'ble Andhra Pradesh High Court in the case of CIT v. Late Begum Noor Banu Alladin [1993] 204 ITR 166 (AP) (Full Bench). He referred to the head notes where it is mentioned that the jurisdiction of the Tribunal is necessarily restricted to subject - matter of the dispute before the first Appellate Authority and the Tribunal cannot allow the assessee or the department to dispute new items or entertain claims of deduction for the first time. If the assessee is precluded from taking a new ground unrelated to subject - matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rice Mill [1977] 39 STC 57 (AP) (FB) relied on; Shaik Ibrahim v. CIT [1968] 69 ITR 117 (AP) explained 4.4 It has been mentioned that the finding of the Tribunal is that the income in question cannot be assessed to tax in the assessment year in which it was taxed or in any other previous year because the time for reopening or reducing the assessment of that previous year has expired by now. Consequently the admitted income is going out of the net of the taxation, which is not equitable in law unless the assessee is entitled to relief by virtue of a clear legal provision, which is not so. It has further been mentioned that if such position is accepted, a number of assesses may be put to the peril of being exposed to the appeal by the revenue even though the ITO may not have applied to the AAC to enhance the tax. The arguments based on equity and justice is a double-edged weapon which cuts both ways. The Hon'ble Court referred to the decision in the case of Karmchand Premchand Pvt. Ltd. and Shri Venkata Rama Lingeshwara Rice Mill (supra) to the effect that the Tribunal has no jurisdiction to allow such grounds to be raised for the first time before it and that the Tribunal has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal had not given any relief traveling beyond the true subject matter of appeal. In the case of Karamchand Premchand Pvt. Ltd. it was held that there must be a decision of the AAC by which the assessee or revenue is aggrieved before an appeal can be preferred. These observations may convey the impression that an assessee who did not raise a particular dispute before the AAC cannot be said to be aggrieved by this order therefore, he cannot file appeal. This may not be a correct approach to the problem. If the assessee is aggrieved by any part of the order of the AAC, he is aggrieved in that sense and he can maintain an appeal. In the case decided by Gujarat High Court and in this case, the assessee can be said to be aggrieved against the order of the AAC because he did not get relief in respect of matter agitated before him. Therefore, there is no bar for filing an appeal to the Tribunal. Of course, if the appeal is allowed by the AAC, it will not be open to the assessee to file the appeal because he cannot be said to be aggrieved by that order. Once the assessee or the ITO files an appeal, the points which could be raised or allowed to be raised is of course a different matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. Therefore, the failure of the Department to file grounds of appeal on May 6, 1994, should not have been made a ground for dismissing the appeal in limine, more so because in response to the show cause notice issued by the Tribunal, the grounds of appeal duly signed by the Assistant Commissioner of Income-tax (Investigation Circle-II), Chandigarh, had been filed. Ld. Sr. Standing Counsel submits that the instant case does not involve procedural law but substantive law and for taking any such ground, the assessee has to show that it is aggrieved by the order of the Ld. CIT(A) as understood u/s 253(1). In the case of Aravali Engineers Pvt. Ltd., v. CIT [2011], 335 ITR 508 (P & H) the assessee was prosecuting appeal before the Tribunal in respect of setting off of some losses against income from house property. According to the AO ,the losses occurred in speculative business and, therefore, such set off could not be granted. The assessee also took up an additional plea that notice u/s 143(2) was not served upon it within the statutorily prescribed time limit. The Tribunal held that the assessee did not raise this plea earlier inspite of opportunities granted to it. Therefore, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO and the Ld. CIT(A).The assessee did not have services of an advocate at that time. 5.1 Coming to the decisions relied upon by the Ld. Standing Counsel, it is submitted that the decision in the case of Padma Sundara Rao (Dead) and Others v. State of TN and Others [2002] 3 SC 533 is not relevant in the context of the facts of this case. In paragraph No. 9 it is mentioned that courts should not place reliance on decision without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case. Therefore, the effect is that the Tribunal has to examine the facts of this case and thereafter decide whether ground No. 1 is an additional ground and if yes whether it should be admitted or not. Further, the facts in the case of Jay Bharat Cooperative Society Ltd. are completely different as the issue required verification of facts as the relevant facts were not available on the record. If the question had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Late Begum Noor Banu Alladin is not good in view of the decision in the case of NTPC. The decision in the case of Gurjargravures P. Ltd. (supra) is distinguished by referring to the facts that there was neither any claim made before the ITO nor there was any material on record to support the claim. Therefore, the facts necessary for deciding the issue were not on record. This decision is also in conflict with the decision of Hon'ble Supreme Court in the case of CIT v. Kanpur Coal Syndicate 53 ITR 225 (SC), in which it has been held that the powers of the ITO and the First Appellate Authority are coterminous. In any case this decision deals with the powers of the AAC analogues to the powers of CIT(A). The powers of the Tribunal have been expressed in widest terms as held in the case of NTPC. The decision in the case of CIT v. Godavari Sugar Mills Ltd, v. CIT, ITR 45 of 1977 (1993) 199 ITR, 351 (Bombay) (Full Bench) makes a reference to the decision in the case of Gurjargravures P. Ltd. and it has been explained that the Hon'ble Supreme Court in that case was not called upon to consider a case where the assessee had failed to make a claim although there was evidence on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as it resigned from the Managing Agency Office. In this situation, the authorities were justified in holding that the provisions of section 12B of 1922 Act were attracted. Consequently, the subject matter of appeal would get confined to limits of the grounds specifically raised in the memorandum of appeal, new grounds raised by the appellant with the previous permission of the Tribunal and the grounds urged by the respondent in support of the decree passed in his favour. The case of the Ld. Counsel is that the ground has been specifically raised by the assessee in the memorandum of appeal, therefore, it has to be decided as such. 5.5 The alternative submission of the Ld. Counsel is that in case the Tribunal holds that this is an additional ground, it may be admitted in the light of decision in the case of NTPC as no further facts are required to be found. 5.6 Ld. Counsel also relied on some additional cases, which were not cited in the course of his main presentation. In the case of Mohan Dairy v. Union of India [2007] 163 Taxman 274 (All), the assessee sought to raise additional ground that the assessment proceedings and consequential assessment order are without jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the claim of deduction u/s. 80E. These were rejected by the Tribunal on the ground that they did not arise out of the order to the AAC. The Hon'ble Court held that the Tribunal had discretion to allow or not allow to include the grounds. But where it is required to decide a question of law for which all facts are on record in the assessment proceedings, there is no reason as to why such a ground should not be allowed to be raised. In other words, the decision in the case of NTPC has been followed. 6. Ld. Counsel was permitted to state additional cases in the course of rejoinder reply. Therefore, the Ld. Standing Counsel was permitted to deal with these cases. It is submitted that the question in the case of V.K. Jain was whether assessment had to be completed on a belated return and pending that notice u/s 148 could not be issued, thus, the facts are distinguishable. In the case of Mohan Dairy the facts regarding non service of notice were on record. In the case of Orissa Cement Ltd., all the facts in regard to the deduction u/s 80E were on record. Similarly in the case of West Bengal Electricity Board all facts were on record. However, in the instant case, all facts are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision vitiated. We find that the two questions do not deal with the same subject. The question before the Ld. CIT(A) had been that income quantified in order passed u/s 153A by disallowing deduction u/s 80IA(4) is against the law as it is based on change of opinion. On the other hand, the question before us is whether the whole of order passed u/s 153A is bad in law because the AO did not have jurisdiction u/s 153A. On bare perusal of section 153A, we find that the provision starts with non obstante clause in respect of sections 139, 147, 148, 149, 151 and 153 ; and it provides that where search has been initiated u/s 132 or books of account, other documents or any assets or cash etc. have been requisitioned u/s 132A after 31.5.2003, the AO shall proceed in the manner provided in clause (a) and clause (b) of this sub-section. Clause (a) is regarding issue of notice to such a person to require him to furnish the return of income. Since the provision overrides section 147 and section 148, we shall refrain from taking analogy from these provisions for the purpose of assessment or reassessment u/s 153A. However, the provision clearly empowers the AO to issue notice in a case where se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue in so far as returned income is concerned. Accordingly this plea of the Ld. Standing Counsel is rejected. 7.2 The third question is - whether, the ground taken by the assessee is an additional ground ? The facts in this connection are that the ground was not taken before Ld. CIT(A) or AO. Thus, no order is available from the lower authorities on this issue. The case of the Ld. Counsel is rather simple that the ground has been taken in the memorandum of appeal, therefore, it is not an additional ground for which leave is required from the Tribunal. On the other hand, the case of the Ld. Standing Counsel is that the ground does not arise out of the order of lower authorities as this question was never taken up before any one of them. We have considered this matter also. Section 253(1) uses the words "aggrieved". A person as appellant can be aggrieved only if the ground had been raised and it is decided against him. It may also include a case where the ground is raised but has not been decided by the Ld. CIT(A). Therefore, section 253(1) bars a ground which was not raised and therefore not decided by the Ld. CIT(A). There cannot be any grievance in respect of a matter wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he handwriting of Milkhiram forming part of the case are annexed as annexure "B"." The finding to which the Ld. Counsel for the assessee took objection and the objections are mentioned at page No. 297 of the report, which are reproduced below :- The Tribunal, however, went into the question as to whether the entire amount of Rs. 3 lakhs has been paid by the assessee to Milkhiram Goayl or not. The Tribunal held that the evidence on record does not justify a finding that the assessee had proved that the sum of Rs. 3 lakhs was paid to Milkhiram Goyal. It is held that the assessee only paid Rs. 1,87,000/- and not Rs. 3 lakhs to Milkhiram Goyal. The Tribunal therefore directed that the sum of Rs. 1,87,000/- be allowed as allowable deduction in computing the assessable income of the assessee. It appears that when the appeal was heard on 27th November, 1957, Mr. Palkhivala counsel for the assessee, objected to the Tribunal's going into the question as regards the quantum of payment, as according to Mr. Palkhivala that question was neither the subject matter of the appeal, nor a question raised by the respondent before the Tribunal. The objection raised by Mr. Palkhivala is stated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands could not have been taken in the memorandum of appeal. 7.3 The final question is - whether, such a ground can be raised for the first time before the Tribunal ? 7.4 In the case of JB Greaves (supra), which is the decision of the jurisdictional High Court, it has been held that the subject - matter of appeal before the Tribunal would be the grounds raised by the appellant before it. Rule 11 provides that the appellant shall not except by the leave of Tribunal, be heard in support of any ground not set forth in the memorandum of appeal. But the Tribunal in deciding the appeal shall not be confined to the grounds set forth in the memorandum of appeal and grounds taken by leave of the Tribunal. Rule 27 provides that even though, the respondent may not have filed appeal, he may support the order of Appellate Assistant Commissioner on any of the grounds decided against him. Thus the subject matter of appeal consist of three elements :- (1) grounds taken in memorandum of appeal, (2) grounds for which leave is allowed by the Tribunal, and (3) grounds taken by the respondent for supporting the order of AAC/CIT(A). This position has also been explained in the case of Hazarimal Nagaj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar to the position of NTPC, as both of them are appellants. Therefore, on the basis of the decision, it abundantly clear that if the pure question of law arises for which facts are on record of the authorities below, such a question should be allowed to be raised, if it is necessary to do so to assess the correct tax liability. 7.4.1 The Ld. Counsel has submitted that this ground could not be raised earlier as the assessee was not properly advised in the proceedings before the lower authorities, and it did not have the services of an advocate at his command. On perusal of record, this submission is found to be correct. The question is one of law and not one of fact. Therefore, it could be that a proper ground could not be raised in absence of services of an advocate although the denial of the deduction had been disputed. This constitutes a reasonable cause in the light of the decision in the case of Shaik Ibrahim (supra). Thus, we find that there are reasons to hold that the assessee could not take up this ground before lower authorities for bona-fide reasons. 7.4.2 In view of the stated position, stated by the Ld. Counsel, that all facts are on record, we admit ground No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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