TMI Blog1996 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. These references were considered together, ultimately creating jurisdictional difficulties for us to answer the questions involved therein, although it must be stated that jurisdictional difficulties making us impossible to deal with and answer questions, floated on the surface of the record. It must also be stated that the aspect is not specifically urged with reference to any of the questions raised either by the assessee or even by the Revenue. It is true and we are very much conscious that under section 260 of the Income-tax Act, 1961, the court gets concerned with the question referred to it in its advisory function. In the process, the court also comes to a decision to refuse to answer such questions on the basis that such questions need not and should not be answered and at times may re-formulate the questions. In the process of reasoning, the court also has to be conscious that in the process of re-formulation if required, the expected questions in such a process must emerge from the material on record considered by the Tribunal, out of which the proceedings under section 260 of the Income-tax Act, 1961, are before this court. It is also to be borne in mind that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had no evidence in support of it, to that finding. Illustratively, a question is also posed---should the court give a wrong answer to the question referred because a patently wrong finding of fact, incidental to the question, has not been expressly challenged by a question specifically directed to that finding? In the context of the real need, situations occur relating to the departure in the context. The court normally should not permit a party who could and should have given relevant evidence at a stage, which is normally not the stage of receiving evidence. In such a situation, the court gets directly concerned with reference to the manner in which such evidence has crept in on the record. Even though this court and the apex court exercised advisory jurisdiction, it has to be understood on the basis that they have only two options in the process of dealing with the situation, either to answer the question of law or to call for a supplementary statement of the case. Even in such a situation, when the court is placed in difficult situations, it is not a must that the question should be answered or as the other alternative, a supplementary statement should be called for. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal." A reading of these four conditions would fortify the basic situation that everything has to be placed on record before the Assessing Officer and cannot be placed thereafter, without the above four hurdles. Even in such a situation, the further provisions of rule 46A(2), (3), (4) would make the situation abundantly clear in the context. The said provisions are as follows: "46A. (2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission. (3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity--- (a) to examine the evidence or document or to cross-examine the wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." It would be seen that what was available to the party before the first appellate authority and that too with rigorous conditions is not available under any circumstances, in view of the introductory negative portion and it is to the following effect : "The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal." Thus, what was a rigorously conditional right before the first appellate authority appears in rule 29 of the Appellate Tribunal Rules, 1963, in the extinct form. It is thereafter, as could be seen from the above provision reproduced, that the Tribunal gets the power, if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed. This power is with reference to certain situations enacted in regard thereto. Firstly, it is to enable the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether there is any kind of compliance in regard to the above statutory provisions. In the light of the view which we are taking hereafter, the traditional and established method of opening this judgment with the reproduction of the questions brought before us both by the assessee as well as by the Revenue is abandoned. It is because with regard to this feature, we find it difficult to answer any of the above questions. This is because the entire material, on the basis of which the Tribunal has proceeded, is the one which has come on record before the Tribunal keeping aside the above jurisdictional requirement in this connection. With the help of counsel for the parties, we have been taken through the material on record and we will refer thereto so far as it is necessary in the context under discussion. The assessee is a company engaged in the business in engineering contracts. With regard to all the years under consideration, separate assessment orders are passed naturally by the Income-tax Officer, Ernakulam. They are at annexure A collectively. The first appellate authority was the Commissioner of Income-tax and heard all the four appeals as a group. He considered common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80J cannot be allowed, in the absence of the assessee being found to be engaged in the manufacturing or production of any article. However, the authority observed that it is true that in the course of executing the contract work, the assessee would be manufacturing or producing certain articles. This aspect was rejected by the first appellate authority describing it to be too insignificant to bestow the character of an industrial undertaking engaged in the manufacture or production of article as envisaged in section 80J. Then the first appellate authority considered the question of deduction under section 35B relating to the assessment years 1980-81, 1981-82 and 1982-83, obviously, relating to the weighted deduction on the expenditure on travelling in Bhutan and also on the maintenance of two branch offices in Bhutan. Thereafter, in paragraph 9 of the order, the first appellate authority considered the question of depreciation admitting it to be an additional ground and raising the rate of depreciation from 10 per cent. to 15 per cent. In the ultimate analysis, the first appellate authority considered the question relating to deduction under section 80HH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses' is deleted. (vii) The assessee is entitled to 15 per cent. depreciation on the steel shuttering equipments instead of 10 per cent. (viii) The assessee is not entitled to relief under section 80J and 80HH as it is not engaged in the manufacture of articles or things." As stated at the outset, we find difficulties two fold, complete violation of the statutory provisions of rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, and with regard to the anomalous situation created on reading of the three judgments. In the judgment of the judicial member (annexure C, pages 63-92), the factual matrix stated in paragraph 5 with reference to seven aspects (a to g thereof) appears flowing from the additional material that has come for the first time before the Appellate Tribunal. The judicial member then has taken up for consideration the aspect of sections 80J and 80HH and in paragraph 8 thereafter in particular has referred to the contention of learned counsel that besides the article manufactured in the construction activities of the assessee, the assessee also manufactured articles which are independently sold and the assessee has received substantial amounts from B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal, the assessee and the Revenue, should have notice and knowledge. All these aspects are already considered earlier by this court in CIT v. Travancore Titanium Products Ltd. (No. 1) [1993] 203 ITR 685, though in a different context emphasising that "ad hocism" in that regard cannot be countenanced in law. With anxiety and our concern with reference to the consideration of responsibility in the context, the record and proceedings of the Appellate Tribunal were specifically called for our satisfaction. In the context of the situation, it was seen and examined not only by learned counsel for the assessee, but also by senior tax counsel appearing before us. We have also gone through the record in the context. We find no reference in the order sheet as to when this copy of details came to be tendered on record. The copy appears to be on record with a covering letter showing that it was filed on February 25, 1987, giving details of annexures with reference to the copy tendered on record. Travelling through the entire record for the said purpose, we do not find any kind of compliance with the statutory provisions. After having seen the record, we are left with a feeling of a des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letely with reference to the factual position pointedly regarding his conclusion that the material is insufficient and even on a probe in regard thereto, there is disagreement even on facts of a vital and important character apart from the situation that the entire observations are based solely on the production of additional material in the above circumstances, even then we find the above single point of difference quoted hereinbefore. When we go through the third judgment of the then president of the Tribunal, we have to appreciate learned counsel for the assessee pointing out to us as regards the awareness of the very limited and restricted jurisdiction of the third member to confine himself only to express his opinion on the point of difference of opinion referred to him. However, the president proceeded to consider the position on the basis that the assessee was manufacturing intermediate products, that too on the basis of the situation as admitted by both the members. The president referred to the decision of the apex court in CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155. In the course of discussion in regard to this decision of the apex court, the president emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact, records its finding, the finding cannot be interfered with by the High Court unless such a finding was not supported by any evidence, was perverse or was patently unreasonable. The apex court was considering the position more or less similar under section 84 of the Income-tax Act, 1961. It is not possible to accept the assumption of the president that marketability so held by the apex court in the other judgment was an essential condition. It is thereafter the president proceeds to record his difficulty that the assessee has manufactured articles or things independent of the main contract to claim the benefit under sections 80J and 80HH. Factually, the president borrowed from the situation as having been agreed to by both the members that the assessee is an industrial undertaking. The president recorded the opinion that the assessee has not manufactured any article or thing independent of the main contract to claim the benefit under sections 80J and 80HH of the Act and further recorded that the view expressed by the accountant member is agreeable. In the process of reasoning, reported decisions have been taken into consideration, mainly drawing strength from the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional aspect of the additional material coming on record as observed above. Additionally, going through the three judgments, when divergence as regards the factual aspects is of a diametrically opposite character from each other, the final order proceeding on the basis that there was agreement between the members who heard the appeal originally would be hazardous in the context of peculiarities pointed out hereinabove. It is not possible to accept the eight points as flowing from the situation of agreement. In fact, the learned senior tax counsel submitted strenuously that except the issues this court can consider the other issues which are the subject-matter of the references preferred by the Revenue. However, in the teeth of the conclusions that are arrived at by us, whereby we are compelled to reject the entire proceeding before the Appellate Tribunal, so much so that the final order, in our judgment cannot be understood to flow as a direct consequence of the three orders referred to by us hereinbefore. In such a situation, the submission of learned senior tax counsel is more than difficult for consideration, not to speak of its acceptance. The factual peculiarities compe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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