Rajasthan High Court - Jaipur
C.I.T. Jodhpur vs M/S. Metalising Equipment Co. (P) Ltd., ... on 20 February, 2001
Equivalent citations: 2001(4)WLC318, 2001(2)WLN528
ORDER Balia, J.
(1). Heard learned counsel for the parties.
(2). This is an application under Sec. 25G(2) of the Income Tax Act 1961 at the instance of Commissioner of Income Tax, Jodhpur requiring the Income Tax Appellate Tribunal to slate the case and refer the two questions of law said to be arising out of order of the Tribunal in l.T.A. No. 262/JP/92 to this Court for-its opinion. The questions of law proposed are as under:
"1. Whether on the facts and in the circumstances of the case the Hon'ble ITAT was justified in law in upholding the decision of the learned CIT (A), directing the AO to allow deduction under Sec. 32AB?
2. Whether on the facts and in the circumstances of (he case the Hon'ble ITAT was legally justified in holding that the issue of claim under Sec. 32AB of the Act is debatable even though the provisions of section 32A(80) and 32AB(10) of the Act are very clear and these provisions have been further clarified by Circular No. 559 dated 4.5.90 of the CBDT"?
(3). The Tribunal has refused the application under Sec. 256(1) for referring the aforesaid two questions to this Court.
(4). The assessee has filed the return for the assessment year 1989-90 in the first instance on 29th December, 1989 and the first return was processed u/S. 143(1)(a) on 29th April. 1990 and a refund of Rs. 169/- was also issued. In the said return the assessee has claimed the deduction on account of investment allowance u/S. 32AB amounting to Rs. 61,454/-. Thereafter the assessee filed a revised return u/S. 139(5) of the Income Tax Act wherein the claim of deduction of Rs. 400118/- in respect of 'investment deposit account' was made u/S. 32AB, which envisages that any amount deposited in an account maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income whichever is earlier or utilised any amount during the previous year for the purchase of any new ship, new aircraft, new machinery or plant, without depositing any amount in the deposit account under clause (a) in accordance with, and for the purposes specified in a scheme to be framed by the Central Government, the assessee to be allowed deduction a sum equal to aggregate of the amounts so deposited and any amount so utilised or a sum equal to 25% of the profits of business or profession as computed in the accounts of the assessee and audited in accordance with sub-section (5), whichever is less. This claim made in the revised return u/S. 32AB was disallowed ' by the Assessing Officer u/S. 143(1B) without requiring the presence of the assessee before rejecting the claim. The assessee applied for rectification u/S. 151 pointing out that since the claim u/S. 32AB having been made on fulfilment of all conditions could not have been disallowed by invoking provisions under Sec. 143(1B) and without issuing a notice u/S, 143(2) and without resorting to regular assessment u/S. 143(3). The application u/S. 154 of the Act was rejected by the Assessing Officer by giving the reasons of dis-allowing the claim made by the assessee u/S. 32AB for the first lime in that order. The reasons disclosed in the order u/S. 154 for dis-allowing a claim u/S. 32AB in exercise of jurisdiction of Section 143(1B) were firstly that requirement of Section 32AB should have been completed before the due date of filing of return whereas the assessee has revised return after first order and prima facie the assessee's claimed does not appear to have any merit. Secondly there was option for the assessee either to claim investment allowance or to claim deduction u/S. 32AB in respect of eligible machinery installed during the previous year and investment made therein or amounts deposited with prescribed institutions under that Section. The assessee having opted to claim investment allowance in original return which was duly processed u/S. 143(1)(a) and accepted. The assessee lost his right of claiming benefit of deduction u/S. 32AB through revised return of the income. Lastly, when the claim of investment allowance u/S. 32A has been decided through intimation served on the assessee, according to the Assessing Officer by invoking the provision of Section 143(16) the assessee was not entitled to revise his return of income to claim investment deposit allowance u/S. 32AB. As per the assessee, he was not entitled to revise its return of income on the issue relating to investment allowance as the same had already been decided through the intimation. With these reasoning the application for rectification was rejected.
(5). On appeal CIT (A) held that all the grounds relied on by the Assessing Officer for justifying the refusal of claim of deduction u/S. 143(1B) are themselves debatable issues which clearly make out the case that adjustment by disallowing claim for deduction u/S. 32AB under revised return could not have been apparently denied u/S. 143(1B). It also referred to guidelines issued by CBDT about the power of l.T.O. to make adjustments u/S. 143(1)(a) or 143(AB) clarifying that on debatable issues no adjustment ought to be made which has not been following by the Assessing Officer, which were binding on him. The order of CIT (A) has been affirmed on further appeal of the revenue by the Tribunal.
(6). It is in the aforesaid circumstances this application. In the first instance application u/S. 256(1) for referring the aforesaid two questions said to be questions of law arising out of appellate's order of the Tribunal to this Court was refused by the Tribunal.
(7). Having heard learned counsel for the revenue that order of the Tribunal rejecting the application under Sec. 256(1) cannot be held to be erroneous.
(8). A perusal of Section 143(1B) provides clear answer to the reasons adopted by the Assessing Officer in rejecting the claim of the assessee u/S. 32AB on the basis of revised return. Sub- section 1B of Section 143 reads as under:
Sub-section 1B : Where an assessee furnishes a revised return under sub-section (5) of Section 139 after the issue of an intimation, or Ihe grant of refund, if any, under sub-section (1) of this Section, the provisions of sub-sections (I) and (IA) of this section shall apply in relation to such revised return.
(9). A perusal of the aforesaid provision clearly goes to show that sub-section (1B) operates only in Ihe field where a revised return has been filed after issue of an intimation or the grant of refund, if any, under sub-section (1) of this Section, the provisions of sub-sections (1) and (1A) of this Section has been made applicable in relation to such revised return which has been furnished in sub-sec. (5) or Section 139, (10). The said provisions also envisages the amendment in adjustment made under intimation which has already been sent by the Assessing Officer to the assessee in determining the amount of any additional tax or interest. Therefore, the first ground raised by the Assessing Officer to support the disallowance of deduction under Sec. 32AB as claimed by the assessee in his revised return becomes apparently erroneous inasmuch as Sec. 143(1B) clearly envisage submitting of revised return after intimation u/S. 143(1)(a) and amendment to be made in such intimation by amending the amount of tax payable under the return as the intimation already sent. This is apart from the fact that question itself was debatable issue whether the assessee could furnish revised return in respect of intimation which has already been sent to him u/S. 143(1)(a) or 143(1A). The answer goes against the Assessing Officer. The provisions of Sec. 143(1B) operates only in a case where revised return has been submitted after original return has resulted in intimation under sub-section (1 )(a) of Sec. 143. On the face of it issue about the claim deduction u/S. 32AB could not have been made subject of adjustment solely on the ground of it being claimed as a revision of original return. Otherwise there is no dispute about the finding reached by the CIT (A) that otherwise all the conditions of Sec. 32AB are fulfilled by the assessee to claim u/S. 32AB makes it clearly a case of debatable claim which could not have been prima facie decided by it by way of Section 143(t)(a) as well as u/S. 143(1B).
(11). It has also been informed by the learned counsel that in furtherance of regular assessment proceedings which otherwise became necessary, though the Assessing Officer disallowed the claim, the CIT (A) has set aside that assessment order and accepted the claim in respect of Section 32AB:
(12). These proceedings clearly make out the answer to the question raised by the revenue self evidenced that there cannot be two opinions on plain reading of provision of Sec. 143(18) the claim to deduction u/S. 32AB could not be disallowed on the sole ground of intimation of tax computation u/S. 143(1)(a) in respect of original return having already been sent before filing of revised return, particularly the grounds which weighed with Assessing Officer in disallowing the claim were themselves highly debatable.
(13). This is apart from the fact that as a result of regular assessment which would necessary follow on objection being raised to adjustments u/S. 143(1)(a) or 143(18) the claim of the assessee u/S. 32AB has been accepted by the CIT (A) in regular assessment proceedings, that only remain binding. As such the issue in our opinion is otherwise academic.
(14). This application, therefore, fails and is hereby rejected. There shall be no order as to costs.