9911796707
TMI Blog2005 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax (Appeals) against the assessment order, the assessment order merged in the order of the Commissioner of Income-tax (Appeals) and thereafter the Commissioner of Income-tax could not exercise his jurisdiction under section 263 of the Income-tax Act, 1961 for revising the assessment on the ground of its being erroneous and prejudicial to the interests of the Revenue?" Facts: The factual matrix reveals that the assessee is a registered firm. The assessment for 1980-81 was made by the Income-tax Officer by assessment order dated February 23, 1981. In the said assessment order, the Income-tax Officer allowed weighted deduction under section 35B on Rs. 5,63,350 instead of Rs. 8,90,676 claimed by the assessee. An appeal was preferred against the said assessment order which was decided by the Commissioner of Income-tax (Appeals) by order dated November 25, 1981, upholding the order of the Income-tax Officer. Subsequently, the Commissioner of Income-tax was of the view that the assessment order dated February 23, 1981, was erroneous and prejudicial to the interests of the Revenue inasmuch as weighted deduction under section 35B was allowed on reassortment charges without going into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der which was in favour of the assessee. The assessee could not be said to be aggrieved by that part of the order which was in favour of the assessee. In other words, he submits that weighted deduction which was allowed on Rs. 5,63,350 could not have been the subject matter of appeal before the Commissioner of Income-tax (Appeals), the first appellate authority. He submitted that at the most it was open for the assessee to contend before the Appellate Tribunal that the weighted deduction under section 35B of the Income-tax Act ought to have been allowed on the excluded part of the reassortment charges amounting to Rs. 3,27,326 and that disallowance to that extent was erroneous. Shri Kotangale submits that the Tribunal was not justified in invoking doctrine of merger and could not have set aside the order of the Commissioner of Income-tax passed under section 263. Per contra, learned counsel appearing for the assessee submitted that once the opinion is expressed by the Commissioner of Income-tax (Appeals) on the weighted deduction under section 35B with respect to the reassortment charges, then the jurisdiction under section 263 for revising assessment order on the ground of it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (c) of the newly substituted (with effect from June 1, 1988) Explanation to section 263(1). In that view of the matter, where the action under section 263 is taken prior to June 1,1988, the provisions of said clause (c) of the Explanation cannot be invoked because irrespective of the language in which the amending provisions are couched, the amendment cannot be retrospective with effect from a date earlier to the date on which the amended provision itself was brought on the statute book. The similar view has been reiterated by this court in number of cases viz. CIT v. International Computers Indian Manufacture Ltd. [1991] 187 ITR 580, 582 (Bom), CIT v. Godavari Sugar Mills Ltd. [1992] 198 ITR 196, 200-01 (Bom), CIT v. Bombay Burmah Trading Corporation Ltd. [1992] 107 CTR 53, 54 (Bom). Some of the leading High Courts have taken a contrary view. Let us notice the same. According to the Calcutta High Court, the said clause (c) has tried to make explicit what was already implicit in the Act (see Hindustan Aluminium Corporation Ltd. v. CIT [1989] 178 ITR 74, 93). The very same High Court has further held that the amendment to clause (c) by the Finance Act, 1989, clarifies that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty of 17,480 spindles and 400 looms of Old Manek Chowk Mills; (iii) Loss on account of difference in exchange rate which was referable to the purchase of machinery, etc. as revenue expenditure. For the purposes of the present matter, it is only these three items of claim which are relevant. In the appeal filed by the assessee, the items in respect of which the decision was in its favour were not the subject-matter of appeals. In respect of the above three items, the Commissioner exercised his power under section 263 of the Income-tax Act. The main contention of the assessee considered by the Tribunal was whether or not the order of the Income-tax Officer regarding the said three items in respect of which the assessee had no occasion to prefer an appeal had merged in that of the Commissioner (Appeals) so as to exclude the jurisdiction of the Commissioner of Income-tax under section 263 of the Act. The apex court on reference under section 257 of the Income-tax Act, 1961 was required to deal with the following question referred to it: "Whether, on the facts and in the circumstances of the case, the order of assessment passed by the Income-tax Officer under section 143(3) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with retrospective effect, is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matter as had not been considered and decided in the order passed in appeal on or, before or after June 1, 1988. The very fact that Explanation (c) was given retrospective effect by using the words "on or before or after" itself denotes that the intention of the Legislature is to embrace all orders whether passed on or after or before June 1, 1988. The use of the phrase "on or before or after" is no doubt a little uncommon. The phrase "on or before" denotes immediately at or at any time before. The phrase "on or before and after" to our mind means either immediately at or in the past or future. It means at any time during the continuance of the Act, if it is to be understood in the context of the legislation. Having said so, turning to the facts of this case, so far as allowance under section 35B to the extent it was allowed by the Income-tax Officer is concerned, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to such matter because the same had not been considered and decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
