TMI Blog1972 (7) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... claim in each assessment year for allowance of a sum by way of development rebate in respect of the machinery and plant, etc., installed in one of the industrial units run by it was rightly disallowed and, secondly, whether in the facts and circumstances of the case the Income-tax Appellate Tribunal had the power and jurisdiction to direct the Appellate Assistant Commissioner to entertain and take into consideration the assessee's contention that the profits on sale of certain machinery were not taxable since the business was not in existence at any time during the relevant previous years. In order to properly appreciate and determine those questions it would be necessary to set out a few facts and we proceed to do so. The assessee-company runs two textile mills, one at Bombay and the other at Baroda. It also owns another industrial unit at Kathwada which is known by the name of "Maize Products". During the course of proceedings for assessment to income-tax for the assessment years 1959-60 and 1960-61, the assessee claimed an allowance by way of development rebate in respect of machinery and plant, etc., installed in the textile mill at Bombay. The Income-tax Officer found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ground to allow it to raise the contention before him at the appellate stage. The assessee carried the matter in further appeal before the Tribunal and contended that the Appellate Assistant Commissioner was in error in not permitting the assessee to raise the point in the appeal before him. It was urged that the basic facts necessary for dealing with the contention raised by the assessee were already on record and that it was not necessary for the determination of that question to enter upon any fresh investigation into questions of fact. The Tribunal upheld the argument observing that the contention sought to be raised by the assessee went to the root of the matter and that substantial justice required that the assessee should be given an opportunity to make good his contention. The Tribunal, therefore, directed the Appellate Assistant Commissioner to hear the assessee in regard to the contention sought to be raised by it and decide the matter after hearing both the parties and taking into account such material as may be placed before him. These are the facts material for the decision of the second question. The assessee and the revenue were both aggrieved by the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signated authorities the power of rectification of mistake and sub-section (11) thereof, in so far as it is relevant for the purposes of this case, provides that where an allowance by way of development rebate has been made wholly or partly to an assessee in respect of machinery or plant in any year of assessment under clause (vib) of sub-section (2) of section 10 and subsequently at any time before the expiry of ten years from the end of the year in which the machinery or plant was installed, the machinery or plant is sold or otherwise transferred by the assessee to any person other than the Government, the development rebate originally allowed shall be deemed to have been wrongly allowed and the Income-tax Officer may, notwithstanding anything contained in this Act, proceed to recompute the total income of the assessee for the relevant year as if the recomputation is a rectification of a mistake apparent on the record within the meaning of the said section within the prescribed time limit. It is clear from a combined reading of the relevant part of the proviso to clause (vib) of sub-section (2) of section 10 and sub-section (11) of section 35 that the legislature clearly intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be necessary to resort to the procedure prescribed in section 35(11) only in cases where development rebate has already been allowed and it is subsequently found that it must be deemed to have been wrongly allowed within the meaning of the Act ; and, secondly, that such a course would result in a needless and futile exercise on the part of the Income-tax Officer requiring him to allow development rebate in the first instance although it would have to be treated ultimately as having been wrongly allowed and then to recompute the income of the assessee for the relevant year in exercise of the powers of rectification. It would not be reasonable to attribute to the legislature the intention that the Income-tax Officer should resort to such circumambulatory procedure in order to disallow an obviously untenable claim for development rebate. In our opinion therefore, the Tribunal was right in taking the view that the assessee's claim for development rebate was rightly disallowed. That takes us to, the consideration of the second question referred by the Tribunal. As stated earlier the Appellate Assistant Commissioner, for reasons recorded by him, did not allow the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 237 of the report : " The word 'thereon', of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement which are conferred upon the Appellate Assistant Commissioner by section 31 of the Act. Consequently, the Tribunal has authority under this section to direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on the basis of such enquiry." It would appear from the provisions of section 33(4), as construed by the Supreme Court, that the legislature has conferred upon the Appellate Tribunal wide powers in dealing with appeals preferred to it. The jurisdiction of the Tribunal is undoubtedly restricted to the subject-matter of the appeal but once it is shown that a particular claim or contention was the subject-matter of the appeal before the Tribunal, the law authorises the Tribunal to pass such orders in relation to such claim or contention as it thinks fit. In the present case, the claim of the assessee that the profits realised by it on the sale of artificial silk ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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