COMMISSIONER OF INCOME TAX Vs. HEMRAJ UDYOG

JUDGEMENT

(1.) ON an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court:

(2.) IN the case in hand, the original assessment was completed on December 16, 1988. While framing the assessment, the assessee was granted deduction under Section 32AB at the rate of 20 per cent, of the book profits. As the asses-see was aggrieved on certain additions/disallowances made in the original order, he preferred an appeal before the Commissioner of INcome-tax (Appeals). Out of three grounds taken before the Commissioner of INcome-tax (Appeals), two grounds were rejected and on the third ground regarding depreciation, the Commissioner of INcome-tax (Appeals) remanded the matter back to the Assessing Officer for fresh consideration. Following the directions of the Commissioner of INcome-tax (Appeals) and after examining the issue relating to depreciation, the Assessing Officer made a fresh assessment order on December 27, 1989. Subsequently, the Commissioner of INcome-tax assuming the jurisdiction under Section 263 of the Act, issued a show cause notice to the assessee dated December 31, 1991. After hearing the assessee, the Commissioner of INcome-tax (Appeals) was of the view that the deduction of Rs. 2,66,255 granted to the assessee under Section 32AB was not proper and, hence, it rendered the assessment to be erroneous and prejudicial to the interests of the Revenue. After giving due opportunity of hearing to the assessee, the Commissioner of INcome-tax made an order under Section 263 of the Act directing the Assessing Officer to reframe the assessment after re-examining the claim of the assessee for deduction under Section 32AB of the Act.

(3.) MR. Singhal, learned counsel for the assessee, has brought to our notice the decision of the apex court in the case of CIT v. Shri Arbuda Mills Ltd. [1998] 231 ITR 50, wherein their Lordships held "items, which are not subject-matter of the appeal in view of retrospective insertion of Explanation (c) to Sub-section (1) of Section 263, the powers of the Commissioner of Income-tax shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the asses-see."