9911796707
TMI Blog1982 (6) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5,798 being the amount of interest paid to the sales-tax department on account of delayed payment of sales-tax, yet a third ground taken was against the disallowance of Rs. 29,000, claimed by the assessee as irrecoverable advance but this ground was not pressed before us at the time of hearing of this appeal. 2. We have heard the representatives of the parties at length. Before discussing the appeal on merit, we may refer to an additional ground taken by the assessee which reads as under: "For that the assessment made by the learned Income tax Officer under section 143(3) read with section 144B is barred by limitation in accordance with the provisions of section 153 of the Income tax Act, 1961, and as such the said assessment should be cancelled." The request to take up this ground was strongly objected to by the representative of the department and it was contended that the same does not arise out of the order of the AAC in question as it was never taken up before the AAC. Moreover, according to the representative of the department, this ground involved investigation into certain facts and the assessee could not be permitted to take up a fresh ground of this nature. Som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, even though the IAC has taken a little longer than the maximum period of 180 days for which the extension could be granted. Under this Explanation, the time-limit for the assessment was till the end of September 1979 and had not expired. If the interpretation sought to be placed by the representative of the assessee it was to be accepted even though the assessment is long within the time, the mere delay by the IAC in giving instructions beyond a period of 180 days would make it time barred in every case. Obviously, such was not the intention of the framers of the Act. We therefore, overrule the additional ground on merits. 4. Closely akin to this ground is another ground taken by the assessee's representative that in this case the ITO has issued two drafts assessment orders and, therefore, the assessment passed on the second draft was altogether bad in law. In support thereof reliance was placed by a judgment of the Delhi High Court in Sudhir Sareen vs. ITO, Central Circle-XVII, New Delhi (1981) 128 ITR 445 (Del). In this case, the first draft assessment order has been issued on March 30, 1979 for Rs. 3,27,807. The assessee filed this objections. The draft assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to s. 144(1) i.e., no directions which are prejudicial to the assessee could be issued without giving an opportunity of being heard to it. In the present case, not only was the second draft order itself was served upon the assessee even it had an opportunity to file objection to the same. It did not take any objection that second draft order was bad in law and chose to contest the second draft order on merits. The merits have been considered by the IAC and a final assessment order has been issued in accordance with the directions of the IAC after considering the entire facts and circumstances of the case. So, even according to the decision of the Delhi High Court, referred to above, all that we could do was relegate the parties to the position at the time of second draft order issued but much water has flown thereafter and the proposed enhancements made in the second draft order had already been considered by the IAC as well as by the CIT(A). It is, therefore, now too late in the day to hold that the second draft order vitiates the entire assessment. 5. Coming to the merits of the appeal, we have already given above the various claims which have been agitated before us by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , certification charge had been allowed by the AAC but the Special Bench reversed that decision and accepted the departmental appeal in this behalf. This claim accordingly cannot be allowed. So far the claim at sl. No. 7 is concerned i.e., E.C.G. premium, the said claim was the subject matter of dispute at item No. 15 which was allowed by the AAC and the Special Bench in toto. Therefore, the said claim would be admissible as per the discussion of paragraph 29 of the special bench decision. Similarly, the claim on sales promotion i.e., expenses for foreign customers would fall under item No. 2 of the special bench case and would be fully eligible in view of the discussion in paragraph 26 of the judgment. To this extent the assessee's ground in this appeal is entitled to succeed. 8. The next ground relates to the disallowance of Rs. 5,798 being the amount interest paid by the assessee company on account of delayed payment of sales tax. According to the ITO payment of such interest was not a business expenditure. The CIT(A) has no specifically discussed this ground. The representative of the assessee has referred to a decision of the Hon'ble Supreme Court in Mahalakshmi Sugar Mills ..... 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