IN HIGH COURT OF JUDICATURE AT MADRAS RESERVED on : 28.03.2017 DELIVERED on : 06.06.2017 CORAM : Hon'ble MR.JUSTICE RAJIV SHAKDHER AND Hon'ble MR.JUSTICE R.SURESH KUMAR T.C. (A) No.811 of 2016 Commissioner of Income tax, Chennai. .. Appellant -vs- M/s.Abhinitha Foundation Pvt Ltd. New No.9, Old No.3, Radhakrishna Street, T.Nagar, Chennai 600 017. .. Respondent Appeal filed under Section 260A of Income-tax Act, 1961, against order dated 29.04.2016 passed in I.T.A.No.281/Mds/2016 by Income Tax Appellate Tribunal, Madras ''B'' Bench, Chennai, for Assessment Year 2011-12. For Appellant : Mr.T.Ravikumar For Respondent : Mr.R.Sivaraman ***** 2 JUDGMENT (Judgment of Court was delivered by Rajiv Shakdher, J.) Background facts: 1.This is appeal preferred under Section 260A of Income Tax Act, 1961 (in short Act ) by Revenue against judgment and order dated 29.04.2016 passed by Income Tax Appellate Tribunal (in short Tribunal ) in I.T.A.No.281/Mds/2016. 2.In appeal, Revenue seeks to raise following questions of law for our consideration: i. Whether on facts and in circumstances of case, Tribunal was right in directing AO to consider claim made under Section 80IB(10) even though assessee did not make any such claim in return of income filed ? ii. Is not finding of Tribunal bad by directing AO to consider claim afresh in respect of deduction u/s.80IB (10) especially when no such claim was made in original return filed nor any revised return filed claiming same nor any Petition under Section 264 filed which is against law laid down by Apex Court in case of Goetze India Ltd., reported in 284 ITR page 323 ? 3 3.In order to adjudicate upon present appeal, following broad facts need to be noticed: 3.1.The respondent, i.e. assessee company, had filed its return of income for Assessment Year (AY) 2011-12 on 30.09.2011. By virtue of said return, assessee company had disclosed total income of Rs.3,63,39,110/-, after claiming deduction under Chapter VI-A, equivalent to sum of Rs.6,19,525/-. return filed by assessee company was processed under section 143(1) of Act on 16.02.2012. Thereafter, as it appears, assessee company s return was picked up for scrutiny and notice under section 143(2) of Act was issued to it. Finally, after due opportunity was given to assessee company, assessment order was passed under section 143(3) of Act, whereby, income, as returned by assessee company, was accepted. 3.2.It appears, that assessee company had not made claim in return as originally filed on 30.09.2011 for deduction under Section 80IB (10) of Act. However, during course of assessment, assessee company filed details of project 4 executed by it, based on which, it claimed deduction under Section 80IB (10) of Act. assessee company, while making said claim, as required, also filed details in prescribed format, i.e. Form No.10CCB. It is pertinent to note that Assessing Officer, however, bypassed claim made by assessee company qua deduction under Section 80IB (10) of Act, while passing assessment order. 3.3. assessee company, being aggrieved, preferred appeal with Commissioner of Income Tax ( Appeals) [in short "CIT(A)"]. CIT(A), while noting fact that assessee company s claim for deduction under Section 80IB (10) of Act had been accepted by Department both in preceding and succeeding years, dismissed appeal on ground that claim with respect to deduction under Section 80IB (10) of Act did not form part of original return filed by assessee company. In other words, view taken was that once return is filed, which does not advert to claim, assessee company cannot press for, it being allowed. 3.4.The assessee company, being dissatisfied with view 5 taken by CIT (A), preferred appeal to Tribunal. Tribunal reversed order of CIT (A), after discussing facts and case law on subject in great detail. In sum, Tribunal, having regard to law cited on subject, ruled that both CIT (A) and itself (being appellate authorities) had power to consider revised claim by assessee company, if, it was otherwise entitled to, even though no claim qua same had been lodged by it in return as originally filed. Having, thus, come to said conclusion, in given facts and circumstances, Tribunal remitted matter to Assessing Officer for fresh consideration, based on documents already filed by assessee company at time of assessment. Consequently, assessee company s appeal was partly allowed, albeit, for statistical purpose. 3.5.As is indicated above, Revenue, being aggrieved, have preferred present appeal before us qua judgment and order passed by Tribunal. Submissions of counsels: 4.In support of appeal, arguments have been advanced by Mr.T.Ravikumar, Advocate, while assessee company s case was 6 argued by Mr.R.Sivaraman, Advocate. 5.Mr.Ravi, learned counsel for Revenue, broadly made following submissions: i. Since, assessee company had not made claim for deduction under Section 80IB (10) of Act either in return as originally filed or, by filing revised return, it could not be permitted in law to claim said deduction; ii. Tribunal had erred in law in directing Assessing Officer to consider claim afresh preferred by assessee company under Section 80IB (10) of Act, given circumstance that no such claim had been made by assessee company either in return as originally filed or, via revised return or, even by preferring petition under Section 264 of Act; 5.1.In support of aforesaid submissions, Mr.Ravi relied upon following judgments: a) GOETZE (India) Ltd. vs. CIT, (2006) 284 ITR 323 b) Division Bench judgment of this Court, dated 16.06.2011, passed in T.C.(A) No.344 of 2005, titled CIT vs. M/s.Shriram Investments 7 c) CIT vs. Stepwell Industries Ltd., (1997) 228 ITR 171 d) ACIT vs. Gurjargravures P. Ltd., (1978) 111 ITR 1 e) CIT vs. G.S.Rice Mills, (1982) 136 ITR 761. 6.On other hand, Mr.Sivaraman, learned counsel for assessee company relied upon findings of facts returned by Tribunal. Learned counsel made it point to highlight fact, that even though claim qua deduction under Section 80IB (10) of Act had, inadvertently, not been made in return as originally filed, claim was made during course of assessment proceedings. Learned counsel, thus, submitted that this aspect stands noted by Tribunal in paragraph 3 of impugned judgment and order passed by it. 6.1.It was, therefore, submission of learned counsel for assessee company that given fact that claim had been made before conclusion of assessment proceedings, and that, requisite material was also filed, Assessing Officer ought to have allowed claim. 6.2.Learned counsel further submitted that in any event, even if, it is accepted that Assessing Officer could not have allowed 8 deduction, appellate authorities, which included CIT (A) and Tribunal, were not denuded of their power to allow claim, based on material already on record. It was further contended by learned counsel for assessee company that in this case, all that Tribunal has said is that Assessing Officer should reconsider claim made by assessee company for deduction under Section 80IB (10) of Act, based on material already placed on record at stage, when, assessment proceedings were on. 6.3.In support of his submissions, learned counsel for assessee company relied upon following judgments: a) National Thermal Power Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC) b) judgment of Division Bench of this Court dated 18.11.2014, rendered in T.C. (A) No.878 of 2014, titled CIT vs. Malind Laboratories P. Ltd. c) CIT vs. Sam Global Securities Ltd., (2013) 38 taxmann.com 129 (Delhi) d) Ramco Cements Ltd. vs. DCIT, (2015) 55 taxmann.com 79 (Madras). 7.In rejoinder, Mr.Ravikumar reiterated his submissions and further added that while it may be possible for assessee company 9 to raise additional ground based on material already on record, it cannot be allowed to make claim which does not form part of original return or revised return. Reasons: 8.We have heard learned counsel for parties and perused record. 9.According to us, what clearly emerges upon perusal of record and, in particular, impugned judgment and order of Tribunal, is as follows: i. That, in original return as filed by assessee company, no claim for deduction under Section 80 IB (10) of Act had been made. ii. That assessee company, as observed in paragraph 3 of impugned judgment and order of Tribunal, had made claim for deduction under Section 80 IB (10) of Act at stage, when, assessment proceedings were on. At that point in time, details with regard to project, qua which, claim was made, were filed along with requisite information, in prescribed format, i.e., Form 10CCB. iii. CIT (A), even while recognizing fact that claim 10 made by assessee company for deduction under Section 80 IB (10) of Act had been allowed both in preceding and succeeding years, rejected same, solely, on ground that it did not form part of original return. 10.Having regard to aforesaid facts, what is required to be considered is : whether conclusion reached by Tribunal that appellate authorities, (which included CIT (A) and itself), had necessary power to consider claim for deduction, if, assessee company was otherwise entitled to in law, given fact that relevant material was already available on record. 11.Mr.Ravikumar, in support of appeal, contended to contrary and in this behalf, placed great emphasis on judgment of Supreme Court in GOETZE's case. perusal of said judgment would show that issue which arose for consideration before Supreme Court, was, as to whether claim for deduction could be made by way of letter before Assessing Officer, if, it did not form part of original return. Supreme Court ruled and, while doing so, to our minds, carefully noted that, though Assessing Officer did not have power to entertain claim for deduction made after 11 return was filed, otherwise than by filing revised return, it did not exclude power of Tribunal to consider claim in exercise of its appellate power under Section 254 of Act. This aspect of matter is quite clearly brought to light in operative paragraph of judgment, i.e., paragraph 4. 11.1.For sake of convenience, said observations are extracted hereafter: ''4.The decision in question is that power of Tribunal under S.254 of IT Act, 1961, is to entertain for first time point of law provided fact on basis of which issue of law can be raised before Tribunal. decision does not in any way relate to power of AO to entertain claim for deduction otherwise than by filing revised return. In circumstances of case, we dismiss civil appeal. However, we make it clear that issue in this case is limited to power of assessing authority and does not impinge on power of Tribunal under s.254 of IT Act, 1961. There shall be no order as to costs.'' (Emphasis is ours) 12.To be noted, Supreme Court, while rendering its judgment in case of Goetze, had noticed its own judgment in National Thermal Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC). In 12 said case, Supreme Court was called upon to adjudicate as to whether claim made by way of letter before Tribunal for first time could have been entertained by Tribunal. Briefly, facts which obtained in said case are as follows: 12.1.The assessee, in that case, had available with it surplus funds, which it chose to deposit with banks on short term basis. Qua said short term deposits, assessee earned interest during relevant previous year amounting to Rs.22,84,994/-. said interest was offered for levy tax by assessee, based on which, assessment proceedings were completed. assessee, however, challenged assessment order before CIT (A) qua grounds other than inclusion of interest earned on short term deposits in total income. Consequently, this aspect of matter was not considered by CIT (A). assessee, however, carried matter in appeal to Tribunal. appeal, as originally filed with Tribunal, did not object to inclusion of interest in sum of Rs.22,84,994/-. assessee, however, as indicated above, for first time, by way of letter dated 16.07.1983, raised additional grounds, whereby, challenge was laid to inclusion of interest in total income. basis of challenge was that, since, sum of Rs.22,84,994/- had 13 been deducted from expenditure incurred during construction period, it could not have been included in total income. 12.2.The Supreme Court, after examining matter threadbare, made following observations: ''Under Section 254 of Income-tax Act, Appellate Tribunal may, after giving both parties to appeal opportunity of being heard, pass such orders thereon as it thinks fit. power of Tribunal in dealing with appeals is thus expressed in widest possible terms. purpose of assessment proceedings before taxing authorities is to assess correctly tax liability of assessee in accordance with law. If, for example, as result of judicial decision given while appeal is pending before Tribunal, it is found that non-taxable item is taxed or permissible deduction is denied, we do not see any reason why assessee should be prevented from raising that question before Tribunal for first time, so long as relevant facts are on record in respect of that item. We do not see any reason to restrict power of Tribunal under section 254 only to decide grounds which arise from order of Commissioner of Income-tax (Appeals). Both assessee as well as Department have aright to file appeal/cross-objections before Tribunal. We fail to see why Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 14 In case of Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688, this court, while dealing with powers of Appellate Assistant Commissioner observed that appellate authority has all powers which original authority may have in deciding question before it subject to restrictions or limitations, if any, prescribed by statutory provisions. In absence of any statutory provision, appellate authority is vested with all plenary powers which subordinate authority may have in matter. There is no good reason to justify curtailment of power of Appellate Assistant Commissioner in entertaining additional ground raised by assessee in seeking modification of order of assessment passed by Income-tax Officer. This court further observed that there may be several factors justifying raising of new plea in appeal and each case has to be considered on its own facts. Appellate Assistant Commissioner must be satisfied that ground raised was bona fide and that same could not have been raised earlier for good reasons. Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting assessee to raise additional ground in accordance with law and reason. same observations would apply to appeals before Tribunal also. view that Tribunal is confined only to issues arising out of appeal before Commissioner of Income-tax (Appeals) takes too narrow view of powers of Appellate Tribunal (vide, e.g., CIT v. Anand Prasad (1981) 128 ITR 388 (Delhi), CIT v. Karamchand Premchand P. Ltd. (1969) 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd. (1985) 151 ITR 499 (Guj) (FB). Undoubtedly, Tribunal will have discretion to allow or not 15 allow new ground to be raised. But where Tribunal is only required to consider question of law arising from facts which are on record in assessment proceedings we fail to see why such question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess tax liability of assessee.'' (Emphasis is ours) 12.3.In said judgment, Supreme Court also noticed its own judgment in case of Jute Corporation of India Ltd. v. CIT (1991) 181 ITR 688. This view has been adopted by two Division Benches of this Court in matter of Ramco Cements Ltd. vs. DCIT (2015) 55 taxmann.com 79 (Madras) and, in judgment rendered in: T.C. (A) No.878 of 2014 dated 18.11.2014, titled CIT vs. Malind Laboratories P. Ltd. As matter of fact, Delhi High Court has also, in two separate judgments, come to same conclusion. These judgments are rendered in: CIT vs. Sam Global Securities Ltd., (2013) 38 taxmann.com 129 (Delhi) and CIT vs. Jai Parabolic Springs Ltd., (2008) 306 ITR 42 (Delhi). 12.4.Furthermore, Division Bench of Bombay High Court has also taken same view in judgment rendered in CIT vs. Pruthvi Brokers & Shareholders P. Ltd., (2012) 349 ITR 336 16 (Bom.). issue, with which, Bombay High Court was grappling, was, that claim for deduction under Section 43B of Act had not been made qua relevant assessment year in original return, but was made via letter. Division Bench of Bombay High Court held even while assuming and, in that sense, accepting argument of Revenue, that though, amendment to original return could not be made by filing letter - it would be open to appellate authorities to consider claim and adjudicate upon same. In this behalf, Bombay High Court made following observations: ''14. long line of authorities establish clearly that assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to wit claims not made in return filed by it. It is necessary for us to refer to some of these decisions only to deal with two submissions on behalf of department. first is with respect to observation of Supreme Court in Jute Corporation of India Limited v. Commissioner of Income Tax, 1991 Supp (2) SCC 744 = (1991) 187 ITR 688. second submission is based on judgment of Supreme Court in Goetze (India) Limited v. Commissioner of Income Tax, (2006) 157 Taxman 1. (A). In Jute Corporation of India Limited v. CIT, for assessment year 1974-75 appellant did not claim any deduction of its liability towards purchase tax under provisions of Bengal Raw Jute Taxation Act, 1941, as it entertained belief that it was 17 not liable to pay purchase tax under that Act. Subsequently, appellant was assessed to purchase tax and order of assessment was received by it on 23rd November, 1973. appellant challenged same and obtained stay order. appellant also filed appeal from assessment order under Income Tax Act. It was only during hearing of appeal that assessee claimed additional deduction in respect of its liability to purchase tax. Appellate Assistant Commissioner (AAC) permitted it to raise claim and allowed deduction. Tribunal held that AAC had no jurisdiction to entertain additional ground or to grant relief on ground which had not been raised before Income Tax Officer. Tribunal also refused appellant's application for making reference to High Court. High Court upheld decision of Tribunal and refused to call for statement of case. It is in these circumstances that appellant filed appeal before Supreme Court. 15.The Supreme Court held as under (page 693) :- ''In CIT v. Kanpur Coal Syndicate, three Judge bench of this Court discussed scope of Section 31(3)(a) of Income Tax Act, 1922 which is almost identical to Section 251(1)(a). court held as under: (ITR p. 229) If appeal lies, Section 31 of Act describes powers of Appellate Assistant Commissioner in such appeal. Under Section 31(3)(a) in disposing of such appeal Appellate Assistant Commissioner may, in case of order of assessment, confirm, reduce, enhance or annul assessment; under clause (b) thereof he may set aside assessment and direct Income Tax Officer to make fresh assessment. Appellate Assistant Commissioner has, therefore, plenary powers in disposing 18 of appeal. scope of his power is co-terminus with that of Income-tax Officer. He can do what Income-tax Officer can do and also direct him to do what he has failed to do. (emphasis supplied) above observations are squarely applicable to interpretation of Section 251(1)(a) of Act. declaration of law is clear that power of Appellate Assistant Commissioner is coterminus with that of Income Tax Officer, if that be so, there appears to be no reason as to why appellate authority cannot modify assessment order on additional ground even if not raised before Income Tax Officer. No exception could be taken to this view as Act does not place any restriction or limitation on exercise of appellate power. Even otherwise Appellate Authority while hearing appeal against order of subordinate authority has all powers which original authority may have in deciding question before it subject to restrictions or limitations if any prescribed by statutory provisions. In absence of any statutory provision Appellate Authority is vested with all plenary powers which subordinate authority may have in matter. There appears to be no good reason and none was placed before us to justify curtailment of power of Appellate Assistant Commissioner in entertaining additional ground raised by assessee in seeking modification of order of assessment passed by Income Tax Officer. [emphasis supplied]'' (B) It is clear, therefore, that assessee is entitled to raise not merely additional legal submissions before appellate authorities, but is also entitled to raise additional claims before them. appellate authorities have discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider same. They have jurisdiction to entertain new claim. That they may choose not to exercise their jurisdiction in given case is another 19 matter. exercise of discretion is entirely different from existence of jurisdiction. 16. At page 694, after referring to certain observations of Supreme Court in Additional Commissioner of Income-tax v. Gurjargravures P. Ltd., (1978) 111 ITR 1, Supreme Court observed at Page 694 as under :- above observations do not rule out case for raising additional ground before Appellate Assistant Commissioner if ground so raised could not have been raised at that particular stage when return was filed or when assessment order was made, or that ground became available on account of change of circumstances or law. There may be several factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If Appellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering question so raised in all its aspects. Of course, while permitting assessee to raise additional ground, Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that ground raised was bona fide and that same could not have been raised earlier for good reasons. satisfaction of Appellate Assistant Commissioner depends upon facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose. [emphasis supplied] 17. underlined observations in above passage do not curtail ambit of jurisdiction of appellate authorities stipulated earlier. They do not restrict new/additional grounds that may be taken by assessee before the appellate authorities to those that were not available when return was filed or even when assessment order was made. sentence read as whole entitles assessee to raise new grounds/make 20 additional claims :- if ground so raised could not have been raised at that particular stage when return was filed or when assessment order was made.... or if ground became available on account of change of circumstances or law 18.The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when return was filed. first part viz. if ground so raised could not have been raised at that particular stage when return was filed or when assessment order was made... clearly relate to cases where ground was available when return was filed and assessment order was made but could not have been raised at that stage. words are could not have been raised and not were not in existence . Grounds which were not in existence when return was filed or when assessment order was made fall within second category viz. where ground became available on account of change of circumstances or law. (Emphasis is ours) 12.5. reading of aforesaid observations would clearly establish that arguments advanced by Mr.Ravi that assessee company could only raise additional ground and not make new claim or additional claim is not sustainable. As indicated by us hereinabove, this power of entertaining claim vests with 21 appellate authorities based on facts and circumstances of case. power of appellate authorities to consider claims made based on material already on record is co-terminus with power of Assessing Officer. failure to advert to claim in original return or revised return cannot denude appellate authorities of their power to consider claim, if, relevant material is available on record and is otherwise tenable in law. Any other view, in our opinion, will set at naught plenary powers of appellate authorities. 13.The judgment of Division Bench of this Court rendered in T.C. (A) No.344 of 2005, dated 16.06.2011, titled CIT vs. M/s.Shriram Investments, which is relied upon by learned counsel for Revenue, is clearly distinguishable, as in that case, assessee had sought assessment of tax by disclosing lower taxable income, albeit, by filing second revised return. It is in that context that Division Bench came to conclusion that second revised return, which was filed beyond period of limitation, being non est in law, would not be considered for purposes of ascertaining taxable income. 14.In so far as judgment of Supreme Court in matter 22 of Stepwell is concerned, according to us, it has no applicability to issue raised in instant appeal. In that case, Tribunal appears to have allowed claim of assessee for deduction under Section 35 B of Act without examining facts of case. assessee, evidently, had neither made claim before ITO nor AAC nor, had he, furnished particulars of expenditure incurred by it. It is in this context that Supreme Court observed that onus of proving facts and obtaining benefit of deduction lay on assessee. It was further observed that since assessee failed to prove its claim before ITO or AAC, Tribunal could not have allowed claim on assumption of facts. 15. As indicated above, ratio on said judgment is entirely different and therefore, has no applicability to facts of instant case. 16.Similarly, judgment of Allahabad High Court in matter of G.S. Rice Mills is distinguishable, inasmuch as assessee had neither made claim before ITO nor was any material placed on record in support of claim. High Court, in this context, held that Tribunal was not justified in entertaining claim made 23 under Section 80G of Act and thereupon, issuing consequent direction to ITO to examine same on merits. 16.1.As would be evident from narration of facts set out above, in present case, Tribunal has noted that relevant material was placed by assessee company before Assessing Officer during course of assessment proceedings. Therefore, in our view, said judgment is also distinguishable. 17. similar situation arose in case of ACIT vs. Gurjargravures P. Ltd. In this case as well, it was noticed that neither was any claim made before ITO nor was any supporting material placed on record. It is in this background that no relief was granted. Supreme Court, in this case, disagreed with High Court, inasmuch as it sustained direction of Tribunal issued to ITO to grant appropriate relief qua claim made under Section 84 of Act. 18.In sum, what emerges from perusal of ratio of judgments cited above, in particular, judgments rendered by Supreme Court in GOETZE's case and National Thermal Power Co. 24 Ltd.'s case, and those, rendered by Division Bench of this Court in Ramco Cements Ltd. and CIT vs Malind Laboratories P. Ltd., as also judgments of Delhi High Court in Sam Global Securities Ltd.'s case and Jai Parabolic Springs Ltd.'s case, that, even if, claim made by assessee company does not form part of original return or even revised return, it could still be considered, if, relevant material was available on record, either by appellate authorities, (which includes both CIT (A) and Tribunal) by themselves, or on remand, by Assessing Officer. In instant case, Tribunal, on perusal of record, found that relevant material qua claim made by assessee company under Section 80 IB (10) of Act was placed on record by assessee company during assessment proceedings and therefore, it deemed it fit to direct its reexamination by Assessing Officer. 18.1.In our opinion, view taken by Tribunal is unexceptionable and therefore, does not merit any interference. 19.Consequently, Tax Case Appeal is dismissed, leaving parties to bear their own costs. 25 (R.S.A., J.) (R.S.K., J.) 06.06.2017 Index : Yes/No Website : Yes/No sra/sl 26 To 1.The Asst. Registrar, Income Tax Appellate Tribunal, Chennai 'C' Bench, Chennai. 2.The Commissioner of Income Tax (Appeals)-I, Tiruchirapalli. 3.The Asst. Commissioner of Income-tax, Company Circle II, Trichy. 27 Rajiv Shakdher, J. and R.Suresh Kumar, J. sra/sl Pre-Delivery Judgment in T.C. (A) No.811 of 2016 06.06.2017 http://www.judis.nic.in Commissioner of Income-tax, Chennai v. Abhinitha Foundation Pvt Ltd