Additional ground on grants-in-aid requires fresh consideration where precedent may affect exemption and expenditure disallowance.

ITAT Mumbai admitted an additional ground under Rule 29, accepting that the assessee's alternative plea on the character of grants-in-aid and the related claim for exemption under sections 11 and 12 had not been examined below. The Tribunal held that the cited Bombay High Court ruling could materially affect whether grants received with specific directions were voluntary contributions, and therefore the expenditure disallowance and exemption issue could not be finally resolved on the existing record. The Commissioner (Appeals) order was set aside and the matter remitted to the Assessing Officer for fresh consideration of the main and alternative contentions on facts and in law.

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Issues: Whether the disallowance of expenditure incurred outside India, and the related claim of exemption under sections 11 and 12, required reconsideration in light of the assessee's alternative plea that the grants received with specific directions were not voluntary contributions and that the matter called for examination of the governing evidence and precedent.

Analysis: The Tribunal noted that the assessee's alternative argument, supported by the cited Bombay High Court decision on the character of grants-in-aid, had a direct bearing on the controversy. It admitted the additional ground under Rule 29 of the ITAT Rules, 1963, although that plea had not been raised before the lower authorities. Since the alternative plea and the relevance of the jurisdictional High Court decision had not been examined by the Assessing Officer or the Commissioner (Appeals), the matter required fresh consideration on facts and in law.

Conclusion: The order of the Commissioner (Appeals) was set aside and the matter was remitted to the Assessing Officer for fresh adjudication after considering both the main and alternative contentions.

Ratio Decidendi: Where an unexamined alternative plea supported by potentially material precedent is admitted as additional evidence, the assessment may be set aside for fresh consideration rather than finally decided on the existing record.

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