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TMI Blog2016 (11) TMI 1718X X X X Extracts X X X X X X X X Extracts X X X X ..... project for an aggregate consideration of Rs. 3,77,34,000/. During a search of the premises of the assessee on 11 May 1987, the revenue noticed that 'on-money' was charged by the assessee from its purchasers over and above the consideration disclosed in the agreements for sale. This was on the basis of statements of various employees of the assessee recorded during the course of the search. Though these statements were subsequently retracted by the concerned employees, in the course of proceedings under Section 132 (5) of the Act, the assessee itself came forward with a disclosure of Rs. 66 Lakhs 'onmoney', which was offered for taxation in the two assessment years, namely, 1987-88 and 1988-89, at Rs. 26 Lakhs and Rs. 40 Lakhs, respectively. This offer was purportedly on the basis that the assessee was following the project completion method of accounting and the project was said to be substantially completed during these two assessment years. 3. The Assessing officer did not accept the project completion method proposed by the assessee, and held, firstly, that 'on-money' should be assessed in every year in which the agreements for sale were made by the assessee. Secondl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amounts resulted into double addition of 'on-money'. The Tribunal allowed the revenue's appeals (rejecting the project completion method adopted by the CIT(A) for the assessment years 1985-86 and 1988-89) and dismissed the assessee's appeals (upholding both the quantum as well as the method of accounting the 'on - money' for assessment years 1986-87 and 1987-88). At the same time, whilst doing so, the Tribunal did not grant any relief to the assessee on his alternative plea requiring the assessment of 'on- money' for the assessment years 1987-88 and 1988-89 on the normative basis worked out for the project instead of actual 'on-money' disclosed by the assessee for the two particular years. 6. The assessee thereafter filed a miscellaneous application under Section 254 of the Act pointing out that there was an excess addition on account of 'on-money'. The basis of the assessee's plea was the very same ground urged in the appeals, namely, that if the Tribunal were not to accept the assessee's case that 'on-money' of Rs. 26,00,000/and Rs. 40,00,000/should be added in the last two years, i.e. Assessment Years 1987-88 and 1988-89, on the basis of project completion method, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last two assessment years, i.e. Assessment Years 1987-88 and 1988-89, on the basis of project completion method. The department did not accept this case. The authorities below did not accept either the quantum of on money (i.e. Rs. 66,00,000/) or the method of accounting (i.e. project completion method) proposed by the assessee. Instead the authorities proceeded on a normative basis and concluded that the total on-money received in the project worked out to Rs. 1,25,78,000/. They spread this 'on - money' over all eight years on the basis of percentage completion method, the figures for Assessment Years 1987-88 and 1988-89 coming to Rs. 8,16,000/and Rs. 2,02,000/respectively. (The assessments for Assessment Years 1981-82 to Assessment Years 1986-87, were on the basis of the respective normative figures for these years, which were accepted by the assessee.) The question is, having done so, can the authorities disregard the normative figures (of Rs. 8,16,000/and Rs. 2,02,000/) for Assessment Years 1987-88 and 1988-89 and instead take Rs. 66,00,000/(i.e. Rs. 26,00,000/and Rs. 40,00,000/for Assessment Years 1987-88 and 1988-89) offered in the assessee's returns for the particular as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject, i.e. from Assessment Years 1981-82 to 1988-89 with corresponding figures for individual years (making up a total of Rs. 1,25,78,000/), the revenue cannot possibly hope to bring to tax the amount of Rs. 66,00,000/originally offered by the assessee in the last two years, i.e. Assessment Years 1987-88 and 1988-89. The normative figures for individual assessment years adding upto Rs. 1,25,78,000/must substitute Rs. 66,00,000/wholly. So substituted, the individual figures, according to the Tribunal itself, for Assessment Years 1987-88 and 1988-89 would work out Rs. 8,16,000/and Rs. 2,02,000/, respectively. If one were to add instead Rs. 26,00,000/and Rs. 40,00,000/the result would be that the total on-money would go up to Rs. 1,81,60,000/(i.e. Rs. 1,25,78,000/plus Rs. 66,00,000/less the total of Rs. 8,16,000 and Rs. 2,02,000). That would be an absurd result completely unintended by the department itself. The correct relief, if the department were to assess the assessee in the manner proposed, was to add the 'on-money' figures of Rs. 8,16,000/and Rs. 2,02,000/in Assessment Years 1987-88 and 1988-89 instead of Rs. 26,00,000 and Rs. 40,00,000, respectively. 10. The only reasons why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aceutical goods. The assessee claimed this plant to be part of its existing business and on that footing claimed deduction of certain travelling expenses in connection with this plant as revenue expenditure. The assessing officer disallowed that claim on the ground that the expenditure was not incurred wholly and exclusively for its existing business. The CIT(A) allowed a part of the expenditure as revenue expenditure. The tribunal, however, affirmed the order of the assessing officer and held the entire expenditure to be capital expenditure. In a reference from that order, our Court upheld the tribunal's order. Having done so, it considered the further question, namely, whether the amount of expenditure (disallowed as revenue expenditure) should have been added to the "actual cost" of the plant and benefits allowed accordingly. The assessee's plea was that if the expenditure was held to be capital expenditure, suitable directions be given to the lower authorities to include the same in the cost of the asset and to allow the assessee the benefit of development rebate and depreciation accordingly. This alternative submission made before the tribunal was turned down by it on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be under a duty, to grant that relief. The right of the assessee to relief is not restricted to the plea raised by him Emphasis, italicised inprint, supplied) In that view of the matter, we are of the clear opinion, that the Tribunal was not justified in refusing to consider the alternative submission of the assessee that, in the event the expenditure in question was held by it to be capital in nature, suitable direction should be given for allowing appropriate development rebate and depreciation as admissible under the law on such amount on the appeal that it was an additional ground raised by the assessee. In our opinion, it was the duty of the Tribunal even in the absence of alternate argument of the assessee to make such a direction suo motu. We, therefore, answer the second question in the negative and in favour of the assessee." 13. In the foregoing premises, we are of the view that the Tribunal was bound in law to consider the alternative plea raised by the assessee at the hearing of the appeals. The question now is, what relief should be granted on the applications before us. The miscellaneous application taken out before the Tribunal by the assessee clearly brings out an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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