COMMISSIONER OF INCOME TAX Vs. GOODRICKE GROUP LTD

JUDGEMENT

(1.) In this reference under S. 256(1) of the IT Act, 1961 for the asst. yr. 1977-78, the following question of law has been referred to this Court :

(2.) SHORTLY stated the facts are that the CIT exercised his jurisdiction under S. 263 of the IT Act, 1961 in respect of the asst. yr. 1977-78 as, according to him, the order passed by the ITO was erroneous, inasmuch as, the ITO came to the conclusion that only 7/12th of the head office expenses should be taken into account for disallowing the expenses as provided under S. 44C. He also observed that the ITO erred in calculating the correct amount of disallowance. According to the CIT the order of the ITO was erroneous and prejudicial to the interest of the Revenue. He initiated proceedings under S. 263. The assessee protested against the proceedings initiated by the CIT. Amongst other things a point was raised that the CIT(A) heard the appeal filed by the assessee which was disposed of and, therefore, the CIT cannot exercise his jurisdiction under s. 263 in respect of the order of the ITO which was the subject-matter of appeal before the CIT(A). The CIT in his order under S. 263 noted that the CIT(A) upheld the order of the ITO. The point regarding the applicability of S. 44C was the only point agitated by the assessee in the aforesaid appeal. The point whether the head office expenses for the entire year had been taken into account was not agitated by the assessee. Accordingly, he was of the view that the contention of the assessee that action under S. 263 was bad cannot be upheld. The CIT further noted that as the ITO erred in applying a pro rata basis for head office expenses and as there were mistakes in the computation, the CIT set aside the assessment order and directed the ITO to redo the assessment after hearing the assessee.

(3.) DIVISION Bench of this Court in Rupanjuli Tea Co. vs. CIT (1991) 92 CTR (Cal) 37 : (1990) 186 ITR 301 (Cal) held that S. 44C had no application to the case of an assessee who does not carry on any business outside India. The facts and circumstances of this case are similar and, accordingly, s. 44C had no application to the case of this assessee. For the reasons aforesaid we answer the question in this reference in the affirmative and in favour of the assessee. There will be no order as to costs. SHYAMAL KUMAR SEN, J.: I agree.