TMI Blog1995 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity of its factory and on that basis, it claimed benefit of deduction under sections 80HH and 80-I of the Income-tax Act, 1961. Such deductions, though disallowed by the Assessing Officer for the assessment years 1987-88 and 1988-89, were ultimately allowed by the Income-tax Appellate Tribunal. For the assessment years 1989-90, 1990-91 and 1991-92, the assessee's claim for deduction under sections 80HH and 80-I of the Income-tax Act as a successor to Madhu Chemicals was denied by the Assessing Officer but the claim of the assessee was upheld by the Commissioner of Income-tax (Appeals) by his order D/-28-3-1994. Thereafter, for the assessment years 1992-93 and 1993-94, the Assessing Officer continued to deny the benefit to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the Board in respect of laying down guidelines regarding section 220(6) of the Income-tax Act. Learned counsel for the Revenue urged that the provisions of sub-section (6) of section 220 of the Act vest discretionary power in the Assessing Officer in the circumstances of the case to treat the assessee as not being in default in respect of the amount in dispute. The exercise of the power being discretionary, it cannot ordinarily be subjected to judicial review under article 226 of the Constitution of India. The Department also contended that the assessee may be entitled to the benefit under section 220(6) only in respect of the demand referable to the deduction claim under sections 80HH and 80-I of the Act, but not in respect of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 530 dated 6th March, 1989. Paragraphs 2 and 3 of the circular read as under : 2. Having regard to the proper and efficient management of the work of collection of revenue, the Board has considered it necessary and expedient to order that on an application being filed by the assessee in this behalf, the Assessing Officer will exercise his discretion under section 220(6) of the Act (subject to such conditions as he may think fit to impose) so as to treat the assessee as not being in default in respect of the amount in dispute in the appeal in the following situations. (i) the demand in dispute has arisen because the Assessing Officer had adopted an interpretation of law in respect of which there exists conflicting decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board in exercise of its power under section 119 of the Act which have been reproduced hereinabove. As per the instructions contained in clause 2 of the circular it is obvious that where the demand in dispute relates to issues that have been decided in favour of the assessee in an earlier order by an appellate authority or court in the assessee's own case, the assessee is not to be treated as being in default in respect of that amount in dispute in appeal. While laying down the guideline it has been further clarified that in the situation the assessee will be treated as not in default only in respect of the amount attributable to such disputed points, namely, which have been decided in favour of the assessee in the earlier order by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer. The instructions are not in respect of any particular assessment or a particular case nor is the discretion under section 220(6) to be exercised by the Deputy Commissioner (Appeals) or Commissioner of Income-tax (Appeals), or by any other appellate authority but it is to be exercised by the Assessing Officer himself while invoking the provisions of section 220(6). Law is well-settled that though investing of power is couched in a manner as to vesting a discretion in the authority invested, to exercise that power, in reality when it is shown that conditions for exercise of such power exist, the authority is bound to exercise discretion in that manner. Therefore, in our opinion there is no escape from the conclusion that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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