ASIAN TECHS LTD. Vs. CIT, COCHIN

JUDGEMENT

(1.) Accepting an application under S.256(1) of Income Tax Act, 1961 (in short 'the Act'), following questions have been referred to this Court for opinion by Income Tax Appellate Tribunal, Cochin Bench (in short 'Tribunal') "1. Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that even though the assessee might be entitled to the claim for deduction under S.35B (1) (b) (viii) of the Income Tax Act the said claim cannot be entertained as the order of the Income Tax Officer sought to be rectified had merged with the order of the Appellate Tribunal 2. Whether on the facts and in the circumstances of the case is not the assessee entitled to be allowed its claim for deduction under S.35 B(1) (b) (viii) of the Income Tax Act by rectification of the assessment order for the year 198081 -

(2.) Factual position, which is also undisputed, is as follows: Assessee is a company carrying on business as engineers and contractors. During the course of assessments for assessment year 1980-81, assessee had claimed deductions under S.35B (1)(b) (iv) and (vii) of the Act. Assessing officer, by notice dated 18th July 1993, required assessee to show cause as to why said claims shall not be disallowed. Assessee filed detailed objections on 21st July 1983, but in assessment order dated 14th September 1983, there was no reference to the claim for deduction. Being aggrieved by said order of assessing officer, an appeal was preferred before Commissioner of Income Tax (Appeals) [in short 'C.I.T. (A)'] on various grounds including denial of deductions as claimed. By order dated 8th October 1985, C.I.T. (A) rejected claim of assessee. Matter was further carried by assessee before Tribunal on various grounds including denial of deductions as claimed. By order dated 12th May 1,987 in LT.A. Nos. 835 to 835/Coch/ 1985 relating to four assessment years including 1980-81, deductions as claimed were allowed. While the above mentioned appeals were pending before Tribunal, assessee made a claim by a petition filed on 19th November 1986 before assessing officer for rectification of assessment order for the year in question under S.154 of the Act and to allow claim under S.35B (1) (b] (viii) in respect of expenditure incurred wholly and exclusively for performance of services in connection with execution or contracts for supply of service and facilities at Bhutan. Total expenditure was stated to be Rs. 34,22,367.18 and eligible deduction (one third thereof was Rs. 11,40,189. Assessing officer rejected the petition by order dated 23rd January 1989. Appeal was preferred before C.I.T. (A) against order rejecting application for rectification under S.154. Assessee's stand was that when materials were available in assessment record for grant of relief, application under S.154 was clearly maintainable and relief could not be refused merely on the ground that assessee had omitted to claim same originally. C.I.T. (A) dismissed appeal by its order dated 17th May 1990. Assessee preferred an appeal before Tribunal. By order dated 11th August 1995, appeal was dismissed on the ground that order of assessing officer had already merged with the order of appellate authority and, therefore, claim raised could not be entertained. Assessee, in its application under S.256 (1) of the Act, pointed out that application was made much before the order of Tribunal, but assessing officer had not disposed of the same expeditiously. In any event, issue was not before Tribunal in connected appeals. Therefore, assessment order could not have merged with appellate order. As indicated above, Tribunal accepted the prayer for reference and referred questions, as set out above,, for opinion.

(3.) Learned counsel for assessee submitted "that authorities failed to consider the true scope and ambit of S.154 of the Act in its proper perspective. Since all relevant materials were on record, claim should have been allowed. According to him, when any mistake apparent from record is noticed, jurisdiction is conferred on assessing officer for rectifying the mistake. Expression "record" as used in S.154 will include all materials which, form part of assessing proceedings and not only the return. Even if there was omission to claim relief allowable to him, it could not be said that he is not entitled to get relief. Learned counsel for Revenue, on the other hand, submitted that in view of definite limits of jurisdiction exercisable under S.154, prayer has not been rightly entertained.