COMMISSIONER OF INCOME-TAX VS INDIAN OVERSEAS BANK
2001 P T D 708
[239 I T R 335]
[Madras High Court (India)]
Before K.A. Thanikkachalam and S.M. Abdul Wahab, JJ
COMMISSIONER OF INCOME‑TAX
versus
INDIAN OVERSEAS BANK
Tax Case No.738 of 1982 (Reference No.475 of 1982), decided on 25/02/1997.
Income‑tax‑‑‑
‑‑‑‑Appeal to Appellate Tribunal‑‑‑Powers of Tribunal‑‑‑Tribunal has power to admit additional ground of appeal‑‑‑Tribunal has power to remand matter to ITO ‑‑‑Indian Income Tax Act, 1961, S.254.
Held, that the Tribunal admitted the additional ground since allowing the entertainment expenditure was part of adjustment of tax liabilities of the assessee. Therefore, it could not be said that the Tribunal was incorrect in admitting the additional ground. However, without any orders by the authorities below on this aspect, it would not be possible for the Tribunal to render any decision on this aspect. Under such circumstances, this matter was remitted back to the Income‑tax Officer for the purpose of disposing of the same afresh in accordance with law. There was no infirmity in the order of remand.
CIT v. Patel Brothers & Co. Ltd. (1995) 215 ITR 165 (SC) and Oil and Natural Gas Commission v. Collector of Central Excise (1992) 104 CTR 31 (SC) ref.
S.V. Subramaniam for the Commissioner.
R. Meenakshisundaram for the Assessee.
JUDGMENT
K.A. THANIKKACHALAM, J.‑‑‑In compliance with the direction given by this Court in T.C. No.120 of 1980, the Tribunal referred the following two questions for the opinion of this Court under section 256(1) of the Income Tax Act, 1961:
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal had jurisdiction to allow the assessee to raise the additional ground and directing the Income‑tax Officer to go into the assessee's claim for deduction towards entertainment expenses and allow the same on the basis of the decision of the Appellate Tribunal in I.T.A. No.172/MDS of 1968‑69, dated October 19, 1971?
(2) Whether, on the facts and in the circumstances of the case, that part of the entertainment expenditure which are admissible as a deduction under section 20 should not be taken into consideration for allowance of entertainment expenditure while applying the provisions of section 37(2B) for the assessment year 1970‑71?"
The assessee is one of the fourteen nationalised banks. The only question, which is the subject‑matter of this reference, is the question of jurisdiction of the Tribunal to admit an additional ground relating to the claim for deduction of entertainment expenses and the further question on merits as to whether part of the entertainment expenditure which are admissible as a deduction under section 20 should not be taken into consideration for allowance of entertainment expenditure while applying the provisions of section 37(2B) of the Act. The assessee claimed deduction towards part of the entertainment expenditure considered as the maximum admissible and the Income‑tax Officer accepted the assessee's working in this respect.
On appeal before the Appellate Assistant Commissioner the assessee had not taken up any objection regarding the allowance relating to entertainment expenses. The Appellate Assistant Commissioner, therefore, did not deal with this issue.
This ground was not taken before the Tribunal in the original grounds filed on April 9, 1974. It was taken by way of additional grounds, dated January 17, 1974, wherein it was claimed that the assessee had not worked out the claim properly and that the assessee would be entitled to entertainment expenditure to the extent of Rs.15,602 under the head "Interest on securities" and Rs.15,946 under the head "Business" as against the amount originally allowed at Rs.21,724. The Tribunal overruled the objection of counsel for the Department against the admission and remanded back the matter to the Income‑tax Officer to go into the question and allow the assessee's claim on the basis of the earlier decision in I.T.A. No. 172/MDS. of 1968‑69.???????????
Before us learned standing counsel for the Department submitted that the Tribunal ought not to have admitted the additional grounds and remitted back the matter for fresh disposal. On the other hand, the case of the assessee was that they are approaching the committee constituted under the decision of the Supreme Court in Oil and Natural Gas Commissioner v. Collector of. Central Excise (1992) 104 CTR 31 that this matter should be deferred for the present.
We have heard both learned standing counsel for the Department as well as learned counsel for the assessee.
The fact remains that with regard to the allowance of entertainment expenditure, the assessee has not raised any ground before the Appellate Assistant Commissioner. Even in the original ground filed before the Tribunal such a ground was not taken. The assessee filed a petition to admit additional ground for allowance of entertainment expenditure. The Tribunal admitted the additional ground since allowing the entertainment expenditure is part of adjustment of tax. liabilities of the assessee. Therefore, it cannot be said that the Tribunal was incorrect in admitting the additional ground. However, without any orders by the authorities below on this aspect, it may not be possible for the Tribunal to render any decision on this aspect. Under such circumstances, this matter was remitted back to the Income‑tax Officer for the purpose of disposing of the same for fresh disposal in accordance with law. Now there is also a decision of the Supreme Court in the matter of allowing expenditure under section 37(2B) of the Act as reported in the case of CIT v. Patel Brothers & Co. Ltd. (1995) 215 ITR 165. Therefore, there is no infirmity in the order passed by the Tribunal remitting back this issue for fresh disposal. Accordingly, we answer Question No. 1 in the affirmative and against the Department.
In so far as Question No.2 is concerned, inasmuch as the point raised in this question was remitted back for fresh disposal. This question does not arise out of the order of the Tribunal. Accordingly we are returning the same.
M.B.A./223/FC?????????????????????????????????????????????????????????????????????? Reference answered.