Gujarat High Court
Commissioner Of Income-Tax vs Ahmedabad Crucible Company on 15 June, 1993
Equivalent citations: [1994]206ITR574(GUJ)
JUDGMENT Y.B. Bhatt, J.
1. The present reference is one under section 256(1) of the Income-tax Act, 1961, and the relevant assessment year is 1969-70.
2. The assessee is a registered firm and had sold its machinery, plant, factory, building, etc. The assessee disclosed profits under section 41(2) and the consequential long-term capital gains in its return of income. The Income-tax Officer determined the long-term capital gains at Rs. 96,728 and profits under section 41(2) of the Income-tax Act, 1961, at Rs. 60,643. He also granted consequential relief under section 80T of the Income-tax Act so far as long-term capital gains were concerned. The assessee carried the matter in appeal before the Appellate Assistant Commissioner and, in the said appeal, contended that the sale of its plant, machinery, factory building, etc., was accompanied by its quota rights as well as licence held by the assessee and, therefore, in arriving at the assessee's profit under section 41(2) of the Act, as well as long-term capital gains, a deduction should have been allowed in respect of the value of the quota rights and the licence. It was contended that this claim should be considered on the merits in the interest of justice although it was not specifically so claimed before the Income-tax Officer. It was thus claimed that the value of the quota rights and licence should be deducted from the total consideration. The Appellate Assistant Commissioner accepted this contention and allowed the same and directed the Income-tax Officer to re-examine the claim of the assessee accordingly and the original assessment was set aside.
3. This decision of the Appellate Assistant Commissioner was taken in appeal before the Income-tax Appellate Tribunal where it was contended that it was not open to the Appellate Assistant Commissioner to consider the point on which the assessee was not aggrieved. It was contended that the Income-tax Officer had in fact accepted the working and the figures as placed by the assessee and that there was no mistake in computation of profits, or in the matter of long-term capital gains which required reconsideration. The Tribunal, relying upon a decision of this court, held that it was open to the Appellate Assistant Commissioner to consider on the merits the contentions raised in the appeal, although the same may not have been specifically taken before the Income-tax Officer so long as such contentions pertained to the subject-matter of the assessment.
4. It is this decision which is referred to us by way of the present reference wherein the question raised for our consideration are as under :
"1. Whether the Appellate Assistant Commissioner can set aside the assessment order for consideration of an aspect of the matter which was never before the Income-tax Officer and on which the assessee was never aggrieved ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in confirming the order of the Appellate Assistant Commissioner in setting aside the assessment for consideration of an aspect of the matter which was never before the Income-tax Officer and on which the assessee was not aggrieved ?
3. Whether the order of the Income-tax Appellate Tribunal in confirming the decision of the Appellate Assistant Commissioner in setting aside the assessment for computation of capital gains is correct in law and sustainable from the material on record ?"
5. In our opinion, these questions are conclusively covered by a decision of this court in the case of CIT v. Steel Cast Corporation [1977] 107 ITR 683. We must note that the decision in question specifically deals with the same issue and the same contention, but in the context of the powers of the Tribunal. The principle laid down in the said decision, however, also applies to the contentions raised by the assessee before the Appellate Assistant Commissioner.
6. The principle clearly enunciated in the said decision is that the question raised has been decided ultimately in the light of the decision of the Supreme Court in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232. Accordingly, it must first be determined as to what is the subject-matter of the appeal and that can only be determined by finding out what the Appellate Assistant Commissioner decided, whether expressly or impliedly. The subject-matter of the appeal before the Tribunal can only be the decision, whether expressed or implied, of the Appellate Assistant Commissioner, and the jurisdiction of the Tribunal is thus restricted to the subject-matter of the appeal. Once the subject-matter of the appeal is determined, the Tribunal has very wide powers to deal with all questions of fact and law pertaining to this subject-matter of appeal, and it can allow a new question of law to be raised in support of the same.
7. The same decision at page 694 also deals with the powers of the Appellate Assistant Commissioner. In this context, it has been observed that the powers of the Appellate Assistant Commissioner are not confined to the subject-matter of the appeal, but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner, and so long as it does not travel outside the matters considered and determined by the Income-tax Officer, he can correct any decision of the Income-tax Officer in the course of the assessment even if the assessee is satisfied with it and has not specifically challenged it in the appeal. The order of the Appellate Assistant Commissioner would thus consist of various decisions on matters which may be raised in appeal by the assessee or considered suo motu by the Appellate Assistant Commissioner and the effect of these decisions would be to confirm or reduce or enhance or annual or set aside the assessment. Thus, the crux of the matter is that the Appellate Assistant Commissioner may deal with all points and grounds which arise from not merely the subject-matter of the appeal, but even from the larger area of the subject-matter of the assessment.
8. The aforesaid decision has been considered and approved by a subsequent decision of a Full Bench of this court in the case of CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499. We note that the full Bench was directly concerned with the interpretation of the powers of the Appellate Tribunal but, even in this context, it has been observed, as in the earlier decision, that the powers of the Appellate Assistant Commissioner are wider than the powers of the Appellate Tribunal. The principle laid down in the earlier decision is also approved in the Full Bench decision, viz., that the jurisdiction and the power to deal with the matters in issue must be from the perspective as to what was the subject-matter of the assessment and not merely on what was the subject-matter of appeal.
9. On the facts of the case, there is no dispute that the subject-matter of the assessment was the computation as regards the profits sharing from the sale of the property in question coupled with the computation of long-term capital gains. Thus, it was this issue which was directly before the Income-tax Officer and it was the very same issue which was open before the Appellate Assistant Commissioner.
10. In view of the aforesaid position, we are of the opinion that the Tribunal was correct in specifying the three questions raised in the present reference for our consideration and each question must be answered in the affirmative, in favour of the assessee and against the Revenue. The reference is answered accordingly. No order as to costs.