TMI Blog2016 (5) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... of independent companies manufacturing feeds and compound premix, which are dissimilar. The assessee has also furnished price level comparability of an identical product manufactured by an independent party and the same was also ignored by the AO. However, the assessee was produced the same before the CIT(Appeals), who after examining came to the conclusion that marketing price of the assessee is justified in view of the price chart by the comparable cases. As such, in our opinion, the findings given by the CIT(Appeals) in his order is appropriate and does not call for any interference - Decided in favour of assessee - ITA No. 1396/Mds/2015 - - - Dated:- 14-1-2016 - Shri Chandra Poojari, Accountant Member And Shri G. Pavan Kumar, Judicial Member For the Appellant : Shri V. Vivekanandan, CIT For the Respondent : Shri N. Anush Shanker, CA ORDER Per Chandra Poojari, Accountant Member This appeal by the Revenue is directed against the order of the Commissioner of Income-tax(Appeals) dated 18.3.2015. 2. The Revenue has raised the following grounds: 2. The learned CIT(A) ought to have appreciated the fact that the assessing officer has rightly restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Foods (India) Ltd. and M/s. Shanthi Feeds Pvt. Ltd. and noticed the profit margin between 2% to 3%. According to the AO, the assessee artificially assigned margin at 15% to the intermediate product was with the sole intention of claiming higher exemption u/s.80IB of the Act. Accordingly, the AO restricted the profit margin of the premix unit to 3%, thereby restricted the claim of deduction u/s.80IB of the Act, to ₹ 2,11,30,061/- as against the claim of Rs. 11,86,74,886/-. Aggrieved, the assessee carried the matter before the Commissioner of Income-tax(Appeals). 4. On appeal, the Commissioner of Income-tax(Appeals) observed that the feed premix has a compound of various nutrients necessary for the poultry birds. The premix is prepared in two stages, one dealing in vitamins, amino acids and various micro ingredients. The second stage is preparing them for as applicable for specific bird life stage. The second stage activity is carried on at Pondicherry Unit and the various premixes manufactured here are used in feed mills of Suguna throughout the country. The premix is manufactured based on the requirement of the various regions and despatched to them as per production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that all the invoice data shows that the Premix Unit was selling its Premix Concentrate to some of the outside parties at a higher rate than the internal transfers and also a comparison of the supplement purchased from outside parties showed that the other parties, like M/s. Divi Enterprises were selling the Premix of Broiler @ Rs. 350/- per kg. The premix internal transfer made by the assessee was @ Rs. .240/- per kg. From this data it cannot be said that the assessee company with reference to Premix Unit, is inflating profits or diverting profits for claiming deduction u/s 80IB of the Income Tax Act, 1961. According to the CIT(Appeals), the Assessing Officer has considered the net profit margin of Feed Mixing Unit and restricted the profits u/s 80IB of the assessee company and he has not made comparison of the comparables to restrict the profit margin u/s 80 IB of the Income Tax Act, 1961. The CIT(Appeals) further observed that the Assessing Officer has not brought any adverse evidence on record to show that the profit margin has been inflated at the Premix unit to claim deduction u/s 801B of the Income Tax Act, 1961. Therefore, the CIT(Appeals) directed the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Full Bench case, the Gujarat High Court also discussed the decisions of the Supreme Court in Hukumchand Mills Ltd. v. CIT(supra), CIT v. Mahalakshmi Textile Mills Ltd.(66 ITR 710)(SC), Addl. CIT v. Gurjargravures P. Ltd. (111 ITR 1) and CIT v. S. Nelliappan(66 ITR 722)(SC). The Full Bench of the Gujarat High Court dissented from the view of this court in CIT v. Gangappa Cables Ltd. (251 ITR 61). 10. In the decision of the Supreme Court in Jute Corporation of India Ltd. v. CIT (187 ITR 688), the Supreme Court once again reviewed the law on this question and referring in particular to the decision in Addl. CIT v. Gurjargravures P. Ltd. (supra) held that the observations in that decision do not rule out a case for raising an additional ground before the CIT(Appeals) if the ground so raised could not have been raised at the stage when the return was filed or when the assessment order was made or if the ground became available on account of change of circumstances or law and that there may be several factors justifying the raising of such a new plea in an appeal, and each case has to be considered on its facts . There does not seem to be any clear pronouncement of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in which the Supreme Court held that if a dealer who had returned certain sales and allowed them to be taxed found on a later decision of the court that the same were not taxable, he could file an appeal and ask for condonation of delay. Further, the right to appeal to the Commissioner of Income-tax (Appeals) is conferred by section 246 in identical terms on 'any assessee aggrieved' by the Assessing Officer's order, and yet the Gujarat High Court itself rightly held in later cases that an assessee could raise before the Commissioner of Income-tax (Appeals) for the first time a point which he had not raised before the Assessing Officer and which was therefore not dealt with in the assessment order. It is submitted that the correct position in laws that both the Commissioner of Income-tax (Appeals) and the Tribunal have the jurisdiction in every case to entertain a ground which was not urged before the authority whose order is appealed against, but they, judicially exercising their discretion, may or may not entertain the new ground. 11. There is also the decision in S. S. Gadgil v. Lal and Co. (53 ITR 231), wherein the Supreme Court delineated the characteristics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is not strictly an arbitral Tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority can itself enter the arena of assessment, either by pursing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the taxpayer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself. 13. These aspects have also to be kept in view while considering the powers of the Appellate Tribunal in entertaining additional grounds and an authoritative pronouncement is needed. 14. In our opinion, this Tribunal has no jurisdiction to grant relief on consideration of an additional ground raised by the ld. DR in arguing for the first time although such ground re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to pass an order on the appeal, i.e., in respect of the subject matter of the appeal. The order that it thinks fit must be in respect of the subject-matter of the appeal and so long as it is in respect of it, it can be passed regardless of its nature or contents. By its order the Tribunal can dispose of the appeal and not something not included within its scope. In the Department s appeal for increase in the assessable income the only question for its consideration is whether the increase or part of it should be allowed or not. Whether the amount already assessed was wrongly assessed or not or whether the assessee is liable to be assessed at all or not is question quite outside the scope of the appeal and any decision on it cannot be said to be an order on the appeal. Consequently it cannot be said that the Tribunal would have power to enhance the assessment even without any prayer by the Revenue to that effect, if it accepts this ground of defence that it was not liable to be given a relief u/s.80IB of the Act at all. On that ground being accepted it can only to increase the assessed income; only that would be an order on the appeal by the Department. Any other order such as enh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rule 29 of Income Tax Rules, which is as follows:- Rule 29:- The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or , if the income tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced . Further, whatever rule is applicable for filing the appeal before the Tribunal is also applicable for filing additional grounds. Thus sec. 253(6) of the Act prescribes that appeal to the Tribunal shall be filed in the prescribed form and shall be verified in the prescribed manner and shall, in the case of an appeal made, on or after the 1st day of October, 1998 irrespective of the date of initiation of the assessment proceedings relating thereto, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able or not. We came across judgment of Jurisdictional High Court in the case of P. Kuttikrishna Nair vs. ITAT, Madras and Another, (34 ITR 540). In that case, whether the Tribunal can consider the Miscellaneous Petition suo motu and the Tribunal, in exercise of its own powers, can verify the mistake whether pointed out by the D.R. or on its own. This decision of the jurisdictional High Court pertains to the old Income-tax Act of 1922 where rectification by the Tribunal is provided under section 35 of the old Act and in section 35 of the old Act, it was specifically provided that the words in like manner appearing in sub-section (2) of section 35 in relation to sub-section (1) of section 35 are not sufficient to apprehend the Authorised Representative of the Income-tax Department. It is noted that the ld. Authorised Representative for Revenue/assessee have no power to sign any appeals, Cross-objections, grounds and additional grounds before the Tribunal. He is authorized only to argue the case. He is not competent to sign the appeals, Co-objections, grounds and additional grounds before the Tribunal as per the provisions of the Act. As per section 140 of the Income Tax Act, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of a limited liability partnership, by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner thereof. (d) in the case of a local authority, by the principal officer thereof ; (dd) in the case of a political party referred to in sub-section (4B) of section 139, by the chief executive officer of such party (whether such chief executive officer is known as secretary or by any other designation) ; (e) in the case of any other association, by any member of the association or the principal officer thereof; and (f) in the case of any other person, by that person or by some person competent to act on his behalf. 20. The procedure for filing of additional grounds is at par with the filing of appeal and the rules framed under ITAT Rules for filing of appeal will also apply to additional ground also. The IT Rules, 1962, prescribes an appeal shall be in form No.36 and the form gives the required verification portion. It is also prescribed in Rule 47 that memorandum and the grounds of appeal as also the verification portion shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d price level comparability of an identical product manufactured by an independent party and the same was also ignored by the AO. However, the assessee was produced the same before the CIT(Appeals), who after examining came to the conclusion that marketing price of the assessee is justified in view of the price chart by the comparable cases. As such, in our opinion, the findings given by the CIT(Appeals) in his order is appropriate and does not call for any interference. Further, the DR has strongly objected the admission of fresh evidence in the form of invoice of purchases made from Divi Entereprises, Probiotech Industries Pvt. Ltd. and Avitech Nutrition Pvt. Ltd.. In our opinion, these documents were very much before the AO and the assessee has also produced the following documents before the AO: a) The details of 80IB claim wef AY 2004-05 b) Copies of purchase invoices of Poultry feed premix from 3rd Party supplier M/s. Divi Enterprises c) Copies of Appellant Stock Transfer notes d) Comparative Financial statements w.e.f. AY 2006-07 to 2010-11 pertaining to entitlement of deduction u/s.80IB as well as assessee e) Also in response to the notice of AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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