TMI Blog1998 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner is quoted which reads as under : "... the losses of the cashew department and the losses of the hessian department (if any) cannot be set off against the profits of the insecticides department for and from the assessment year 1974-75. Since this has been done the orders were certainly erroneous and they would be prejudicial to the interests of the Revenue because in the long run, the total income would be reduced. It may be mentioned that the losses in the cashew department for the assessment year 1971-72 was Rs. 2,90,273 with unabsorbed depreciation of Rs. 9,332. In the circumstances, I shall set aside the assessments for the years 1974-75 and 1975-76 and direct the Income-tax Officer to make fresh assessments in accordance with law so as to exclude the losses of the cashew department and of the hessian department (if any) after giving adequate opportunity to the assessee-company." The Income-tax Officer thereafter made a fresh assessment under section 143 of the Act in pursuance of the directions of the Commissioner of Income-tax given in the revision. In the said assessment proceedings, the Income-tax Officer accepted the claim that even ignoring the cashew d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax and the order of the Commissioner of Income-tax qualified the powers of the Income-tax Officer as he employed the expression, "so as to exclude the loss of the cashew department". He, therefore, submitted that the order of the Commissioner of Income-tax is qualified and it is limited to consider the loss of cashew department and hessian department and, hence, the provisions of section 143(3) of the Act are not applicable. In support of his submissions, he placed reliance on the following decisions : Modi Industries Ltd. v. CIT [1995] 216 ITR 759 (SC), (ii) CIT v. Seth Manicklal Fomra [1975] 99 ITR 470 (Mad), (iii) Raja D. V. Seetharamayya Bahadur v. WTO (Sixth) [1995] 213 ITR 502 (Mad), (iv) CIT v. Ulagammal Achi (S. K.) [1987] 166 ITR 210 (Mad), (v) Faizunnissa Begam v. CED (Asst.) [1995] 214 ITR 749 (Mad), (vi) CIT v. Mansa Ram and Sons [1991] 190 ITR 453 (All), (vii) Katihar Jute Mills (P.) Ltd. v. CIT [1979] 120 ITR 861 (Cal) and (ix) CIT v. Multimetals Ltd. [1991] 187 ITR 98 (Raj). Mr. K. Ramagopal, learned counsel for the assessee, on the other hand, submitted that the order of the Commissioner consists of three limbs; firstly, the Commissioner se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff against the profits from the insecticides department. The irresistible conclusion one reaches is that the set off of the loss from the two different and distinct businesses against the profits of other business was not warranted by the provisions of the law and the direction of the Commissioner to exclude the losses of the cashew department and the hessian department has to be read along with or coupled with his earlier direction to make a fresh assessment in accordance with the law. In other words, he directed the Income-tax Officer to make a fresh assessment after excluding the losses in the cashew department and hessian department and, therefore, it is not permissible for the assessee to pick out one portion of the order of the Commissioner and contend that the order of assessment in its entirety was set aside. The order of the Commissioner has to be read in the context in which he initiated the revisional proceedings, the order passed in the revision and his final conclusion. There are two lines of cases falling on either side of the line. In CIT v. Seth Manicklal Fomra [1975] 99 ITR 470, this court held that the powers of the Income-tax Officer to make the assessment are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to entertain the claim. The zeal of the Income-tax Officer to carry out the directions of the higher authority may be justified, but at the same time it should not prevent him from examining the claim of the assessee on the merits. His duty to make an assessment does not begin and end with carrying out the directions of the Commissioner and his duty is something more, that is to determine the correct taxable income. We are of the opinion, nothing precludes the assessee from making a claim before the Income-tax Officer at the time of finalisation of the assessment proceedings and equally nothing prevents the Income-tax Officer from examining the claim on the merits of the matter. It is well to remember that the assessment was being redone by the Income-tax Officer within four years from the date of the original assessment order and when he is in the process of the completion of the assessment, he is bound to consider each and every claim preferred by the assessee. Let us imagine a case of a concluded assessment and there are no pending assessment proceedings, but when the assessee makes a claim for deduction of losses, the Income-tax Officer cannot refuse to entertain the claim and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) of the Act when he was in the final process of assessment in the determination of total income of the assessee as the assessment pursuant to the directions of the Commissioner has not reached the stage of finality. We find that the Central Board is more liberal in its approach and directed the Income-tax Officer to consider the claim of statutory deduction even when the assessee has not made such a claim (vide : Circular No. 14 (XL-35) of 1955 dated April 11, 1955---Chokshi Metal Refinery v. CIT [1977] 107 ITR 63 (Guj)). We are of the opinion, such an attitude of the Income-tax Officer would instil confidence in the minds of the taxpayer that his income would be properly determined and he is not required to pay the tax, neither one paise more nor one paise less than what is correctly and rightly due in accordance with and under the provisions of the statute. In this view of the matter, we are of the opinion that the order of the Appellate Tribunal is sustainable in law, though for different reasons stated above. Accordingly, we answer the question of law referred to us in the affirmative and against the Revenue. The assessee will be entitled to costs of a sum of Rs. 750. - ..... 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