1993 (2) TMI 72 - HC - Income Tax

High Court rules Tribunal erred in law by not applying amended section 80J, deems remit order unauthorized.

The High Court held that the Tribunal erred in law by not applying the amended section 80J during the appeal proceedings. The Court deemed the Tribunal's ... Appeal To Tribunal, Power To Remand Case Issues:Remand of the case to the Appellate Assistant Commissioner | Validity of the Tribunal's order for non-exercise of jurisdiction and authorityAnalysis:The judgment pertains to an income tax assessment case for the years 1974-75 and 1975-76, where the primary dispute was regarding the deduction claimed under section 80J of the Income-tax Act, 1961. The disagreement between the assessee and the Revenue revolved around the inclusion of borrowed funds in the capital employed in the business. The Income-tax Officer and the first appellate authority ruled against the assessee's claim, leading to an appeal before the Appellate Tribunal. The Tribunal, upon finding that an amended section 80J favored the Revenue but was subject to challenge in the Supreme Court, decided to remit the case back to the first appellate authority. The Tribunal instructed the authority to consider the judgments of the Calcutta and Madras High Courts and the Special Bench at Bombay while awaiting the Supreme Court's decision on the amendment's validity.The Revenue contested the Tribunal's decision to remit the case, arguing that the Tribunal should have applied the amended section 80J supporting their position instead of sending the case back to the first appellate authority. On the other hand, the respondent-assessee defended the Tribunal's remit, asserting that it was within the Tribunal's jurisdiction to direct a reevaluation by the first appellate authority. The High Court, after hearing arguments from both sides, concluded that the Tribunal erred in law by not giving effect to the amended section 80J during the appeal proceedings. The Court emphasized that the Tribunal should have decided the matter based on the law as amended at the time. Therefore, the Court held the Tribunal's order of remit as unauthorized, illegal, unnecessary, and uncalled for, as it failed to fulfill its legal duty.Consequently, the High Court answered the first question regarding the remand of the case in the negative, favoring the Revenue, and the second question concerning the validity of the Tribunal's order in the affirmative, also in favor of the Revenue. The references were disposed of accordingly, with a directive to forward a copy of the judgment to the Income-tax Appellate Tribunal, Cochin Bench.