TMI Blog1996 (1) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 80J of the Income-tax Act, 1961 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer was not within his jurisdiction while he modified the computation of the capital in the order dated January 18, 1975, for giving effect to the order of the Appellate Assistant Commissioner for this assessment year ? The assessee is a public limited company. The assessment year concerned is 1968-69. The original assessment of the assessee for the assessment year 1968-69 was completed on January 24, 1972. In the said assessment, the assessing authority did not consider the claim of the assessee for relief under section 80J of the Act, as according to him, the assessment had resulted in a loss. But, it was specifically observed in the assessment order that the relief will be computed at the appropriate time in which section 80J is to be actually allowed. Aggrieved by the assessment order, the assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals), Ernakulam. While the appeal was pending before the Commissioner of Income-tax (Appeals), the assessing authority reopened the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the said appellate orders. In the consequential order dated January 18, 1975, passed by the assessing authority, besides giving effect to the directions contained in the appellate orders, he also recomputed the relief available to the assessee under section 80J of the Act. In that process, he reduced the net cost of the fixed assets from the original figure of ₹ 11,86,52,528. In addition, he also reduced the total value of the assets by a sum of ₹ 4,50,00,000 being a short-term dollar loan, in addition to other deductions from the capital of the company. Being aggrieved by the recomputation of the relief under section 80J of the Act made by the assessing authority in the order dated January 18, 1975, the assessee filed an application under section 154 of the Act, inter alia, contending that the question regarding grant of relief under section 80J has already been considered by the assessing authority in the reassessment order dated March 11, 1974, granting relief and that the assessing authority in such circumstance, has no jurisdiction suo motu to recompute the same and the said recomputation is beyond the jurisdiction of the assessing authority. The assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J, for the net result of the assessment was a loss ; that the reassessment proceedings are only for the benefit of the Department, that in such a proceeding, it is not open to the assessee to claim any relief nor for that matter, is the assessing authority obliged to consider the claim of the assessee for any relief, that the assessing authority in the reassessment order has acted wholly without jurisdiction in granting relief to the assessee under section 80J of the Act. Learned senior counsel also contended that the order dated January 18, 1975, must be considered to be an order passed under section 154 also. It was also contended that on the merits also the assessee has no case for the reason that the decisions in Madras Industrial Linings Ltd. v. ITO [1977] 110 ITR 256 (Mad) and in Century Enka Ltd. v. ITO [1977] 107 ITR 909 (Cal) relied on by the Tribunal in support of the case that dollar loans are liable to be included in the capital of the company have been overruled by the Supreme Court in Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308. On the other hand, Sri C. N. Ramachandran Nair, learned counsel appearing for the assessee, contended that the assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relief already granted earlier. The other contention of learned senior counsel is that the order dated January 18, 1975, must be treated as an order under section 154 of the Act. It is to be noted that the Department has no case that the mandatory requirements of section 154(3), namely, an amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard. We have perused the entire records. We could not find any such notice being issued to the assessee before modifying the computation made in the order dated March 11, 1974. In such circumstances, we are not in a position to agree with the contention of the Department that the order dated January 18, 1975, must be treated as a rectification order also. There is one more difficulty in considering the claim of the Department that the order dated January 18, 1975, is a rectification order. That is the question as to whether dollar loans can be considered as debenture for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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