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TMI Blog2016 (5) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustainable to law. 5. The learned CIT(A) wrongly compared the market prices of poultry premix products with the net margin, without granting an opportunity to the assessing officer for pointing out this erroneous comparison and deleted the lawful disallowance of excessive claim made by the assessee u/s.80IB." 3. The facts of the case are that the assessee is a public limited company and is fully integrated poultry processor committed to the food service industry. Integration, typically encompassing enterprises ranging from breeding, feed milling and contract growing to wholesale and retail marketing. The end to end poultry farming comprises of independent business activities. Each activity has become a separate sphere of welldefined science. The assessee has initiated the integration process in the industry and covers even the grandparent stage also. The assessee is also engaged in poultry compound premix through its manufacturing facility located at Pondicherry, which has been set up in the year 2003-04 relevant to the assessment year 2004-05 and claimed deduction of Rs. 11,86,74,886/- u/s.80IB of the Act. However, the Assessing Officer restricted the deduction to Rs. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals) observed that the assessee furnished before him invoices of purchase made from M/s. Divi Enterprises where on 14.10.2009 the broiler vitamin supplement was purchased at the rate of Rs. 350/- per kg whereas the same feed premix broiler starter was internally transferred on an average rate of Rs. 240/- per kg. and also third party invoice made by M/s. Probiotech Industries Pvt Ltd. Nepal to a third party [for supply of Poultry Corn Feed Mash (Concentrate) Broiler Feed Supplement Premix] @ Rs. 270/- per kg. in the month of October 2009. The assessee purchased "Performer Broiler BS Premix" from M/s. Avitech Nutrition Pvt Ltd. Gurgaon @ Rs. 320/- per kg. whereas the internal transfer made by Suguna to its feed mixing units was @ Rs. 240/- per kg. 4.1 However, the Commissioner of Income-tax(Appeals) asked the assessee to produce further details regarding the sale made by the Premix Unit to outside agencies apart from internal transfers. The assessee produced copies of invoices during the month of October 2011 where the Poultry Feed Premix (Broiler Premix) was supplied to M/s. Godrej Agrovet Ltd. Surat @ Rs. 232/- per kg. The CIT(Appeals) also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment before the AO : 1. N.P. Saraswathi Ammal & Ors. V. CIT 138 ITR 19 2. CIT v. Assam Travels Shipping Services (199 ITR 1)(SC) 3. Bhavana Chemicals Ltd. v. CIT (231 ITR 507) (SC) 4. Thanthi Trust v. ACIT (238 ITR 117)(Mad.) 5. Shaw Scott Distilleries (P) Ltd. v. ACIT (76 ITD 89)(Spl. Bench Kolkata) 6. ACIT v. Indwel Lianings P. Ltd. (313 ITR(AT) 118) According to the DR, this preliminary objection to be admitted and adjudicated. 6. On the other hand, the ld. AR strongly opposed the above ground raised by the D.R. stating that denial deduction cannot be subject matter before the Tribunal and consideration of that ground and thereby remitting the issue to the file of the A.O. amounts to enhancement of assessment for which,the Tribunal has no power. 7. We have heard both the parties and perused the material on record. In our opinion, there is a methodology to raise the ground before the Tribunal and there should be good and sufficient reason to admit an additional ground or preliminary objection. 8. The Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 allows the appellant to urge any ground not taken in the memorandum of appeal, that does not mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned author, N. A. Palkhivala does not agree with the view of the Gujarat High Court and, in the edition of the Law and Practice of Income-tax (Eighth Edition of 1990), under the heading "Raising new questions - Ground not taken before lower authority" he opines as follows: "The Punjab and Haryana High Court had held that the assessee is entitled to urge before the Tribunal a ground regarding the validity of the assessment which he had given up before the Commissioner of Income-tax (Appeals) or any other ground which he had not taken by the Madras High Court. The Bombay High Court has held the assessee entitled to claim for the first time before the Tribunal certain benefits which he had not claimed before. In CIT v. Karamchand Premchand P. Ltd. , the Gujarat High Court held that if a point arising in the assessment order is not taken in appeal by the assessee and is therefore, not dealt wit by the Commissioner of Income-tax (Appeals), the assessee cannot raise that point before the Tribunal even if, on a judicial pronouncement subsequent to the Commissioner of Income-tax (Appeals) on a point which was not agitated before him, while the right to appeal to the Tribunal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the citizen and the State : they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income and to assess a tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State." 12. A full Bench of the Madras High Court in State of Tamil Nadu v. Arulmurugan and Co. [1982] 51 STC 381, referring to the decisions of the Supreme Court in CIT v. Mcmillan and Co. (33 ITR 182), CIT v. Kanpur Coal Syndicate (53 ITR 225)(SC) and CIT v. Mahalakshmi Textile Mills Ltd.(supra) explained how a tax appeal differs from an appeal in civil cases in the following manner (at page 392 of 51 STC) : "An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law laid down by the Legislature. An appeal is a continuation of the adjustment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Madras High Court in the case of Panchura Estate Ltd. v. Government of Madras (87 ITR 698), wherein it was held that the assessee having not challenged the assessment before the first appellate authority or before the Tribunal, such ground cannot be entertained by the Tribunal and it is squarely applicable to the facts of the present case. Admission of additional ground does not involve a mere question of discretion. It is also as question relating to jurisdiction of the Tribunal. If the Revenue filed an application for permission to file additional grounds of appeal in relation to the subject-matter which is already before the Tribunal by way of an appeal, the matter will merely rest on the discretion of the Tribunal. But, where the ld. DR seek to bring in new items which had not been questioned by AO and which had nothing to do with the subject-matter of the appeal before the tribunal as originally filed, the question will arise whether the Tribunal will have jurisdiction to entertain the additional grounds. In this case, the AO has not raised this issue in the assessment order. Therefore, there is no need to adjudicate such ground by the Tribunal. Accordingly, the preliminary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, i.e., to an increase in the assessed income. In other words, so long as it did not ask for the enhancing the assessment, its plea with regard to deciding the issue of quantification u/s.80IB of the Act to be entertained. If it prayed that the assessment to be enhanced, it was not entitled to be heard whereas if it simply prayed that the Department's appeal be allowed, on merits, it was entitled to be heard. 17. The argument of the ld. DR by itself makes it clear that the Revenue desired to argue against the whole of the assessment. The argument by the ld. DR itself does show that it has sought permission to argue only against increase in the assessed income and not against the assessment itself. It itself never distinguished between the contention that it wanted to raise and its effect and did not say that though its effect might be to render the assessment already done invalid did not seek invalidation of it. Actually if it only desired that the appeal be allowed and did not desire any positive order it had the right, under Rule 27 of the ITAT Rules. Since the fact as it appears, is that the ld. DR wanted permission to argue against the whole assessment and thereby increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case to which the appeal relates is more than two hundred thousand rupees, one per cent. of the assessed income, subject to a maximum of ten thousand rupees : (d) where the subject matter of an appeal relates to any matter, other than those specified in clauses (a), (b) and (c), five hundred rupees. Provided that no such fee shall be payable in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section (4). Further, Income Tax Rules, prescribes in Rule 47 as under:- (1) An appeal under sub-section (1) or sub-section (2) of section 253 to the Appellate Tribunal shall be made in Form No.36( and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and for the form of verification appended thereto shall be signed by the person specified in sub-rule(2) of rule 45). (2) A memorandum of cross-objections under sub-section (4) of section 253 to the Appellate Tribunal shall be made in form No.36A(and where the Memorandum of cross-objection is made by the assessee, the form of memorandum of cross-objections, the grounds of cross-objections and the form of verification appended thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uardian or any other person competent to act on his behalf ; and (iv) where, for any other reason, it is not possible for the individual to verify the return, by any person duly authorised by him in this behalf : Provided that in a case referred to in sub-clause (ii) or subclause (iv), the person verifying the return holds a valid power of attorney from the individual to do so, which shall be attached to the return ; (b) in the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family; (c) in the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to verify the return, or where there is no managing director, by any director thereof; Provided that where the company is not resident in India, the return may be verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return : Provided further that(a) where the company is being wound up, whether under the orders of a court or otherwise, or where any person has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made to it by the assessee or by the Department, i.e. through Assessing Officer only who is party to the appeal. The assessee or the Assessing Officer has a right just like a party to draw the attention of the Tribunal and they have a further right to insist that the Tribunal shall examine the additional ground. In view of the above legal and factual situation, the Authorised Representative whether of the Revenue or of the assessee stands in the same position as an outsider. The only person competent to sign and verify an appeal should sign and verify like miscellaneous petition, stay petition and others like additional ground. Where the signature and verification on the memorandum of appeal was made by any agent of the assessee or for the Revenue and not by the assessee or the Assessing Officer, it cannot be held that the appeal or any application filed is a valid appeal or application. Further, as per the ITAT Rules, 1963, filing of additional grounds equates the procedure for filing of appeal with that of these applications. As far the assessee is concerned, the appeals are to be signed by the assessee and none other than the assessee. Hence, the preliminary objection by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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