TMI Blog1998 (1) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the learned CIT(Appeals)-I, Bombay, erred in disallowing under section 43B of the Income-tax Act, the sales tax liability of ₹ 22,78,693. 4. The learned CIT(Appeals)-I, Bombay, erred in confirming disallowance of the following two amounts of expenses under section 37(2)(A) of the Income-tax Act, 1961. (i)Rs. 83,078 being conference expenses. (ii)Rs. 5,70,725 being expenses incurred by the employees while visiting dealers and customers. 6. The learned CIT(Appeals)-I, Bombay, erred in confirming the disallowance of expenses of ₹ 30,300 being payment for services other than lodging and boarding at hotels and computed the disallowance under section 37(3A) of the Income-tax Act. 7. The learned CIT(Appeals)-I, Bombay, erred in confirming disallowance of the claim under section 80-J of ₹ 8,48,270 in respect of the new industrial undertaking by the appellant. The undertaking commenced commercial production on 1-4-1981. The learned CIT(Appeals)-I, Bombay, eared in interpreting the words at any time within the period of 33 years next following the 1st April, 1948 . It is respectfully submitted that the plain meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 5(a). The CIT(Appeals) has also dealt with this issue in the appellate order. However, the assessee omitted to raise the ground of appeal originally before the Tribunal. Placing reliance on the decision of the Bombay High Court (Full Bench) in the case of Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351, the learned counsel for the assessee contended that the ground being purely legal in nature, the same arising out of the order of the revenue authorities and there being material on record to decide this ground, the additional ground has got to be admitted and disposed of on merits. In response to the query from the Bench as to why this ground of appeal was omitted to be raised before the Tribunal in the Memo of Appeal, the learned counsel argued that it was not necessary for the assessee to explain the reasons for the omission and that on the authority of the Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. (supra), the Tribunal is bound to admit the ground of appeal. The attention of the learned counsel was also invited to the decision of the Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688, wherein their Lordships of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. 7. In the case where the appellant files an appeal within the period of limitation, a situation may arise where it becomes necessary to raise an additional round of appeal in view of certain circumstances. There may be several factors justifying the raising of such a new plea in an appeal. In such circumstances, whether the period of limitation should come in the way of the assessee raising such additional ground of appeal, the settled law as of today is that the appellate authorities if satisfied that the additional ground raised was bona fide and the same could not have been raised earlier for good reasons, may in its discretion, permit the assessee to raise an additional ground even after the expiry of the limitation provided for filing an appeal. The Tribunal has got the discretion to either admit the additional ground of appeal or not to admit the same. When we say that the Tribunal has the discretion it does not mean that the Tribunal does not have the duty to exercise the discretion judiciously. It is the duty of all the judicial authority to exercise its discretion most judiciously. Therefore, when a discretion is vested in the judicial authorities, it is duty b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad Electricity Co. Ltd. (supra), also does not support the view canvassed by the learned counsel. The issue before their Lordships of the Bombay High Court in the case of Godavari Sugar Mills Ltd. v. CIT [1993] 199 ITR 351, was about the powers of the Tribunal. After discussing the case law, their Lordships held that the ratio of the judgment of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra), which is in relation to the powers of the Appellate Assistant Commissioner, cover all appellate authorities under the Income-tax Act. Their Lordships further held that the Appellate Tribunal has jurisdiction to permit additional grounds to be raised before it even though these may not arise from the order of the Appellate Assistant Commissioner, so long as these grounds are in respect of the subject- matter of the entire tax proceedings. Though their Lordships held that the Tribunal has the power to admit the additional ground of appeal, it has not laid down the law that the Tribunal should admit the additional ground of appeal without being satisfied as to why such a ground was not raised in the Memo of Appeal. The Bombay High Court referred to its earlier decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason for omission of the additional ground in the Memo of Appeal filed before the Tribunal, we have no option but to decline to exercise the discretion in favour of the assessee. As already pointed out, the discretion vested in the judicial authority cannot be exercised arbitrarily. There is a duty upon the Tribunal to exercise the discretion in a most judicial manner. When the requirement of law is to satisfy the Tribunal about the existence of good reasons for the omission of the ground in the original appeal then on the failure of the assessee or his representative to give any reason much less a good reason for the omission, the consequences are obvious. In the given circumstances we cannot entertain the additional ground of appeal raised by the assessee. The same is therefore not entertained. 15. We now deal with Ground Nos. 1 and 5 of the appeal, which survive for our consideration. 16. Ground No. 1 relates to the computation of disallowance under Rule 6D. The assessee had computed the disallowance by consolidating the total amount spent under the head. The Assessing Officer held that as per Rule 6D, the disallowance was to be computed on the basis of each and every tour s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision. 19. The learned D.R., on the other hand, contended that the disallowance is clearly warranted under section 37(3A) and that there is no merit in the contentions advanced on behalf of the assessee. 20. We have given our careful consideration to the rival contentions. Section 37 is a residuary section. It provides for deduction in respect of any expenditure not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly or exclusively for the purposes of business . . . . . . . . As is evident from the language of section 37, the expenditure which is specifically covered under sections 30 to 36 does not fall within the ambit of section 37. The decision of the Bombay High Court in the case of Chase Bright Steel Ltd. (No. 1) ( supra) was relating to the expenditure which was covered under section 31 and it was held that since the expenditure was covered specifically under section 31, the same does not fall within section 37 and the restrictions under various sub-clauses of section 37 would not apply in respect of such expenditure. Here we are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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