TMI Blog2001 (3) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... 44,004. There being other contested additions, in the assessment, and the CIT(A) passed the affiliate order on 15-5-1987. The IAC (A) submitted an application dated 8-9-1987 before the CIT(A) requesting that since clauses (ii), (iii), (v), (vi) and (viii) of section 35B(1)(b) were no longer on the Statute book as the same were omitted by Finance Act No. (2) of 1980, w.e.f. 1-4-1981 and, as such, weighted deduction on foreign commission, salaries, bonus, export promotion, etc. and other expenses was not allowable in the year, and to reduce deduction under section 35B of the Act, which had been granted by him in the assessment framed on 16-12-1983. The CIT(A) proceeded to pass an order under section 154 of the Act, which he did on 13-11-1987 and reduced the deduction under section 35B of the Act detailed above in this order. 3. On the above said issue, Shri N.K. Sud, Advocate, appearing submitted that the basic question was whether the learned CIT(A) could reduce the deduction under section 35B of the Act, which had been allowed by the ITO. He accepted that the first appellate authority possibly could have reduced the deduction while passing order in appeal against the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhancement or reduction. Explanation : In disposing of an appeal, the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) by the appellant." 8. The above provision has various limbs. From clauses (a), (b) and (c) of sub-section (1) pure power is drawn. In the instant case, we are concerned with primarily clause (a) because it was the assessment order which was involved. Sub-section (2) places constraints and obligations inasmuch is if assessment or a penalty order is to be modified adversely against taxpayer, he must be given reasonable opportunity of showing cause that action contemplated is not proper. Explanation to the section must be closely seen because, though, on a casual took, one may initially form an impression that while disposing of an appeal, the first appellate authority can consider and decide any matter arising out of the proceedings - the assessment order being only a part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 251 (1) in paras 7 and 8 of his order and has come to the conclusion that the provisions of section 251(1) are meant for the benefit of the taxpayer only. However, I am not in agreement with the above view. 15. The scope of powers of the AAC has been explained by the Hon'ble Supreme Court in a number of cases. In particular, the Hon'ble Supreme Court in the case of CIT v. McMillan Co. [1958] 33 ITR 182, 193 has quoted, with approval, the observations of Justice Chagla in Narrondas Manordass v. CIT[1957] 31 ITR 909 (Bom.) as under :--- "It is clear that the Appellate Assistant Commissioner has been constituted a revising authority against the decisions of the Income-tax Officer, a revising authority not in the narrow sense of revising what is the subject-matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate amount which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Appellate Authority by taking recourse to proceedings under section 154 in accordance with the amended provisions of Act applicable to the assessment year 1981-82, which is the assessment year under appeal, there is no infirmity in the order passed by the learned first Appellate Authority. His action is accordingly upheld and the appeal filed by the assessee is dismissed. 20. In the result, the appeal filed by the assessee is dismissed. REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 There being difference of opinion between the two Members, who heard the appeal in ITA No. 81 (Asr.) / 1988, the following point of difference is framed for reference to the resident of the Income-tax Appellate Tribunal under section 255(4) of the Income-tax Act, 1961 :--- "Whether the proposed order of the Judicial Member that the CIT(A) could not pass the order under section 154 in respect of the assessment and the issue, which had not been brought in appeal before him in relation to allowance of Rs. 44,004 under section 35B of the Income-tax Act, 1961 is justified or the view expressed by the Accountant Member that the first Appellate Authority was justified in taking recours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(Appeals) to rectify the order of the Assessing Officer and even enhance the income. For this proposition, the learned Accountant Member relied on the decision of the Hon'ble Supreme Court in the case of Mcmillan Co. wherein they have quoted with approval the observation of Justice Chagla in Narrondas Manordass'case. Reliance also was placed on the decision of the Hon'ble Punjab and Haryana High Court in the case of Dalmia Dadri Cement Ltd. Reference also was made to the decision of the Hon'ble Calcutta High Court in the case of Indian Steel Wire Products Ltd . Having regard to the above decisions and keeping in view of the amendment brought in section 35B by the Finance (No. 2) Act, 1980 w.e.f. 1-4-1981, it was his view that the deduction was wrongly allowed by the Assessing Officer at Rs. 44,004 and the learned Appellate Authority was fully justified in taking recourse to the proceedings under section 154. 6. On the above facts, the point of difference was referred to me for decision as extracted above. At the hearing none appeared on behalf of the assessee. After hearing Shri Tarsem Lal, the learned Sr. D.R., I am of the view that the learned Accountant Member has correct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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