Shah Harilal Bhikabhai and Sons vs Commissioner of Income Tax

K. Sivashankar Bhat, J.—The following question was referred for our consideration u/s 256(1) of the Income Tax Act, 1961, which reads as follows :

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the provisions of section 154 of the Income Tax Act, 1961, are applicable ?"

In the course of the assessment proceedings, weighted deduction u/s 35B was allowed to the petitioner. Subsequently, realising the pronouncement of the decision of this court which is now reported in the case of Ullal Narayana Malya v. CIT [1975] 1 Kar LJ 487, proceedings were taken u/s 154 and this allowance was withdrawn. The assessee contended that this is not a matter falling u/s 154 of the Act. The contention of the assessee was not accepted by the Appellate Tribunal. Hence, this reference at the instance of the assessee.

Learned counsel appearing for the assessee contended before us that the earlier order of assessment was the subject-matter of appeal before the Commissioner of Income Tax in respect of certain allowances claimed by the Assessee under the head "salary payment" u/s 35B and the assessee succeeded partially. In these circumstances, learned counsel for the assessee contended that the order of assessment stood merged with the appellate order, and if so, the assessing authority was not competent to amend such an order. For this proposition, learned counsel relied upon the decision of this court in the case of Commissioner of Income Tax, Karnataka-I Vs. Hindustan Aeronautics Ltd., , a Full Bench decision of this court.

The question raised before the Appellate Tribunal as well as the one found in the statement of the case is entirely different from the one now contended for by learned counsel. The only question raised before the Appellate Tribunal which has been referred for our consideration pertains to the interpretation of section 154; the question of merger and consequent incompetence of the assessing authority to take action u/s 154 was never raised. In fact, the order of the Appellate Tribunal does not even refer to the fact that the earlier assessment order was the subject-matter of an appeal which is the basic fact necessary to advance the present contention of learned counsel for the assessee.

It is now well-established that such a new plea cannot be entertained by this court. The question should arise out of the order of the charges (foreign), (2) telephone charges (foreign) and (3) telex charges (foreign). So far as remaining items of expenditure are concerned, the assessee''s claim was not seriously pressed. In view of the concession made by learned counsel for the assessee, the assessee is not entitled to claim weighted deduction in respect of the items of expenditure other than those in respect of which the assessee''s claim has been allowed.

In the light of the above discussion, the questions which have been referred to us, for our opinion, shall have to be answered in the affirmative and against the assessee.

Reference answered accordingly with no order as to costs.