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TMI Blog2002 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... w in not entertaining the additional grounds as referred to in the order of the Appellate Tribunal? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the interest paid on money borrowed by which the property constructed is not allowable deduction, since such interest was not payable to the partners of United Investment Corporation by the assessee-company in whose hands the income from the property is computed?" The brief facts are as follows: The assessee is a company in which the public are not substantially interested and it is deriving income from house property and also income from business. For the assessment year 1987-88, the assessee-company filed a return sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the company by treating the same as sham transaction. (b) The learned Commissioner of Income-tax (Appeals) ought to have found that there was no question of sham transaction in the light of the decision of the jurisdictional High Court in the case of Padinjarekara Agencies (P.) Ltd. v. CIT [1988] 173 ITR 637. The Tribunal considered the entertainability of the said additional grounds in para. 7 of its appellate order. Relying on the decision, inter alia, of the Special Bench of the Tribunal (Delhi Bench) in the case of National Thermal Power Corporation v. IAC of I.T. [1985] 12 ITD 99, the Tribunal held that the assessee is not entitled to raise before the Tribunal for the first time a new ground of appeal on an issue which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is concerned, in respect of the very same partnership firm, the income-tax authorities have taken the view that the said partnership is a sham one for the assessment year 1981-82 and that the assessee did not challenge the said finding before the higher authorities. Senior counsel further submitted that from the assessment year 1981-82 till the assessment year 1987-88, the assessee was furnishing the rental income received from the house properties directly and without the intervention of the partnership firm. Senior counsel further submitted that the decision in Padinjarekara Agencies case [1988] 173 ITR 637 (Ker) mentioned above was based on a finding of fact in that case. Counsel also relied on the decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is contended that on admission (erroneous), no income (the sum of Rs. 22,84,994) can be included in the total income. 3. The authorities below have erred and failed in their duty in not adjudicating the facts and evidence on record and mechanically including Rs. 22,84,994 in the total income." The Tribunal declined to entertain those additional grounds. The Tribunal framed certain questions of law and referred the matter to the Supreme Court. The Supreme Court reframed the question as follows: "Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same?" The Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations in that case thus: "In the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. From the aforesaid decision, it is clear that the Tribunal was bound to consider additional grounds, if any, raised by an assessee before it. However, it is for the Tribunal either to allow the same or to reject it depending on the facts and circumstances of each case. In this case, as already noted, the Tribunal has refused to entertain the ground of appeal, inter alia, relying on the Special Bench decision of the Tribunal (Delhi Bench) in the very same case considered by the Supreme Court. In view of the decision of the Supreme Court, which is discussed above, we are of the view that the Tribunal was pot justified in rejecting the additional grounds raised simply on the ground that these questions were not raised either before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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