TaxTMI 
TaxTMI 
1994 (1) TMI 289
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.... by the Tribunal, are as follows : 2. For the assessment years under consideration 1980-81, 1981-82 and 1982-83 the ITO allowed weighted deduction on account of export market development allowance under section 35B(1)(b) of the Act at ₹ 1,15,401 being one-third of ₹ 3,46,223, ₹ 9,45,644 being one-third of ₹ 28,36,932 and ₹ 1,76,779 being one-third of ₹ 5,30,337. The said deductions were allowed without any detailed discussion in the assessment orders. The assessee preferred appeals against the said assessment orders before the Commissioner (Appeals). These appeals, however, did not relate to the question of weighted deduction under section 35B(1)(b). The appeals were disposed of by the Commissioner (Appeals) by his order dated 21-11-1984. 3. The Commissioner was, however, of the prima facie opinion that the ITO wrongly allowed relief/deduction under section 35B(1)(b) and initiated proceedings under section 263 of the Act. The assessee con tended before the Commissioner that the Commissioner had no jurisdiction to pass an order under section 263 because the ITO's order was subject of an appeal before the Commissioner (Appeals) who disposed o....
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....unsel for the assessee in the first instance emphasised the scope and ambit of the power of the first appellate authority and brought home the principle that the first appellate authority's powers are co-extensive with the powers of the Assessing Officers. Therefore, when the assessment as made by the Assessing Officer is brought in appeal before the first appellate authority, the latter is invested with jurisdiction not only to decide the grounds of appeal but also the other matters contained in the assessment order not appealed against. This power arises from the power of the first appellate authority to enhance the assessment. For this proposition numerous decisions have been cited in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) and Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC). 5. Stress was laid on the decisions of this Court in Jeewanlal [1929] Ltd. v. Addl. CIT [1977] 108 ITR 407 (Cal.) and General Beopar Co. (P.) Ltd. v. CIT [1987] 167 ITR 86 (Cal.). Thus, the assessee has sought to impress on us that when the assessment order was subjected to appeal and an appeal order has been passed in pursuance thereof, the entire assessment order merges with....
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....fect of appeal order shall have complete fusion of the assessment order in the appellate order. The said decisions are concerned with altogether different aspect, namely, the scope of the powers of the first appellate authority. Even, if the doctrine of the total merger can be canvassed as a by-product of the principles laid down by the Supreme Court in the said decisions, that would not alter the conclusion this Court arrived at in Hamilton & Co.'s case (supra), in the light of the amended provisions of section 263. 10. Even, in the absence of the new Explanation the revenue could advance its case by citing the judgment of the Supreme Court in State of Madras v. Madurai Mills Co. Ltd. AIR 1967 SC 681. Before parting with the matter we must place on record the arguments which the learned counsel for the assessee strenuously urged to persuade us to make a departure from our decision in Hamilton & Co. (P.) Ltd.' s case (supra). It is respectfully submitted that the decision of the Supreme Court in Madurai Mills Co. Ltd.'s case (supra) does not decide the controversy involved in the present case under reference and is clearly distinguishable. In this case, their Lordship....
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....assessee. The powers under clause (i) are exercised when the order of the Deputy CTO is found to be erroneous and prejudicial to the interests of the revenue. The powers under clause (ii) are exercised with a view to giving relief to the assessee, if possible. In that case, the Deputy Commissioner had exercised powers of revision under clause (ii) of section 12(2). It was in that context that the Supreme Court made the aforesaid observations regarding merger. There is nothing in the decision of the Supreme Court to show that it expressed a view in Madurai Mills Co. Ltd.'s case (supra) different from the one taken in CIT v. Amritlal Bhogilal & Co. [1958] 34 ITR 130 (SC). This very aspect has been stressed by their Lordships of the Bombay High Court in CIT v. P. Muncherji &Co. [1987] 167 ITR 671 . Their Lordships held and observed that the decision of the Supreme Court in Madurai Mills Co. Ltd.'s case (supra) does not decide the issue in controversy. If the decision of the Supreme Court in Madurai Mills Co. Ltd.'s case (supra) does not decide the issue as regards merger, then we can say that the matter is an open issue not finally settled judicially. It is submitted tha....
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....h the order of the Deputy Commissioner, the limitation should run from 21-8-1954 and the notice issued by the Board on 4-8-1958 was not barred by limitation of time and was valid. But, the dealer contended that the subject-matter of revision not being the subject-matter of consideration by the Deputy Commissioner, the revision is of the assessment order of the Deputy CTO, dated 28-11-1952 and the limitation of four years should run from 28-11-1952. It is the contention of the dealer that the revision by the Deputy Commissioner not dealing with the question of exemption of purchases from outside the State, the assessment order allowing such exemption does not merge with the revision order of the Deputy Commissioner. The Supreme Court held against the action of the Board of Revenue on the basis of the finding recorded in the following words:- "It is manifest that the subject-matter of the revision proceedings before the Board of Revenue was the revised assessment order of the Deputy Commercial Tax Officer, Madurai dated 28-11-1952. It follows that the order of the Board of Revenue was made beyond the limit of four years prescribed by section 12(4)(b) of the Act, and it is, ther....
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.... this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal [filed on or before or after 1st day of June, 1988] the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal." 12. In the present case, we are only concerned with clause (c) of the said Explanation. This clause (c) was brought on the statute book for the first time by the Finance Act, 1988 with effect from 1-6-1988. Originally, this clause (c) read as under:- "Where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal, the powers of the Commissioner under this sub-section shall extend to such matters as had not been considered and decided in such appeal." 13. The expressions in sq. brackets 'filed on or before or after 1-6-1988' and 'shall be deemed always to have extended' were inserted in clause (c) by the Finance Act, 1989 with effect from 1-6-1988. In other words, the entire clause (c) of the Explanation to section 263(1) has been inserted by the Finance Acts of ....
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....ivity is restricted to certain areas as spelt out from the Amendment Act itself. The decision of the Supreme Court in connection with the retrospective effect of amendment of section 23(2) is not applicable here because there the Court was concerned with substantive law enhancing the rate of solatium. But here, we are dealing with an explanation which is declaratory in nature. (b) The Finance Acts, 1988 and 1989 which inserted clause (c) in Explanation to section 263(1) clearly provide the degree of retrospectivity in the clause itself. The law is made retrospective with effect from 1-6-1988. In view of the insertion of clause (c) with effect from 1-6-1988, the Commissioner shall have jurisdiction to exercise the powers of revision under section 263(1) in respect of all matters, decided by an Assessing Officer, which has not been considered and decided in appeal by the appellate authority, whether such appeal is filed on or before or after 1-6-1988. In other words, although clause (c) was brought on the statute book with effect from 1-6-1988, the Commissioner may exercise the revisionary jurisdiction under section 263(1) on or after 1-6-1988 even in those cases where the appeals ....
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...., 1966 with retrospective effect from 1-4-1962. 5. Explanation 2 to section 35B Ordinarily inserted by the Finance Act, 1973 with retrospective effect from 1-4-1968. Sl. No. Provision Remarks 6. Explanation 2 to section 37(2A) Inserted by the Finance Act, 1983 with retrospective effect from 1-4-1976. 7. Explanation 8 to section 43 Inserted by the Finance Act, 1986 with retrospective effect from 1-4-197 As against these 7 instances there are 11 other instances including the one under section 263 where, though the same expression is used, there is no mention of retrospective effect having been given to it. Those instances are the following:- Sl. No. Provision Remarks 1. Explanation 2 to section 5 Originally inserted with I.T. Act, 1961 w.e.f. 1-4-1962. 2. Explanation to section 15. Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1-4-1989. 3. Explanation 2 to section 23 Taxation Laws (Amendment) Act, 1984 w.e.f. 1-4-1985. 4. Explanation to section 32A(9) Finance Act, 1976 w.e.f. 1-4-1976. 5. Explanation 2 to section 36(1)(ii)(a ) Finance (No. 2) Act, 1980 w.e.f. 1-4-1981. 6. Explanation 2 to section 40A(7) Finance Act, 1975 w.e.f. 1-4-1973. 7. Explanat....
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....dividually entitled to the relief. This Explanation was inserted by the Taxation Laws (Amendment) Act, 1975, having effect from 1-4-1976. There also the question arose whether the Explanation is applicable only in respect of computation of property income from assessment year 1976-77 and onwards. This Court in CIT v. Bejoy Kumar Almal [1977] 106 ITR 743 (Cal.) held that the Explanation is clarificatory in nature and seeks to set at rest the ambiguity in the provisions contained in sections 23(2) and 26. Therefore, the Explanation should be given retrospective effect and should be taken as explaining the law as it always has been. Similar view was also taken by the Delhi High Court in CIT v. Shyam Sunder [1980] 122 ITR 541 . It is not that the Court did not have occasion to decide on the issue arising from the effect of retrospectivity on account of insertion of Explanation with effect from a date later than the date of commencement of the Act. Even after taking notice of limited retrospectivity, this Court held that the Explanation should be deemed to be in force from the very inception of the law, its effect ordinarily being clarificatory. All the arguments now being urged by Mr. ....
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.... and complexities. There may be many other cogent considerations for the Legislature to fix the point of retrospectivity somewhere in the past. We are not concerned with that. In the present case, we cannot persuade ourselves to share the view of the counsel for the assessee that the Commissioner while passing an order on any date prior to 1 -6-1988 cannot draw support from the principle declared by this Explanation. 16. The Commissioner proceeded to revise the assessment and passed the revision order under section 263 obviously taking the view, even in the absence of the Explanation, that the merger extends only to the matters which are appealed against and dealt with in the appeal order. The insertion of the Explanation by the Legislature vindicates his view as correct. There would be no difficulty for us at all to uphold the initiation of the proceeding even if there was no Explanation as now inserted. The Explanation merely restates what was the law latent in the unamended provision as we have earlier said. The insertion of the Explanation (c), after its amendment by the Finance Act, 1989, in its text does not create complication. It simply says that, no matter, when the order....