1977 (11) TMI 1

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....ndent, a company carrying on the business of copper engraving and manufacturing of labels, appealed to the Appellate Assistant Commissioner against an order of assessment made under section 143(3) of the Income-tax Act, 1961, and one of the grounds of appeal was that the Income-tax Officer had erred in not giving the assessee any benefit under section 84 of the Act. The assessment year was 1963-64. No claim, however, had been made before the Income-tax Officer when he completed the assessment that the assessee was entitled to an exemption in respect of a portion of its profits under section 84. The Appellate Assistant Commissioner dismissed the appeal on the ground that the question of error on the part of the Income-tax Officer did not ari....

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....stitute the subject-matter of assessment, and that if there is any item of income or claim for deduction which is not processed by the Income-tax Officer, it would not be a part of the subject-matter of assessment and the Appellate Assistant Commissioner would not have the power to consider and process it in an appeal preferred by the assessee. Both the decisions, Commissioner of Income-tax v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) and Narrondas Manordass v. Commissioner of Income-tax [1957] 31 ITR 909 (Bom), are based on section 31(3) of the Indian Income-tax Act, 1922, defining the powers of the Appellate Assistant Commissioner in disposing of an appeal. Section 251(1)(a) of the Income-tax Act, 1961, which is the provision appli....

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....s not exempt from tax under section 84. But in order that the Appellate Assistant Commissioner should be entitled to interfere in appeal on a particular point, it is not necessary that there should be a decision of the point given by the Income-tax Officer. It is enough if the particular item of income in relation to which the point is sought to be raised has come in for consideration by the Income-tax Officer and has been subjected by him to the process of assessment. " We do not find it possible to agree with the High Court that if an item of income is taxed, the question of its non-taxability should be taken to have been considered by the Income-tax Officer though no such claim has been made before him by the assessee. This is directl....

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....Pallonji Mistry [1962] 44 ITR 891 (SC) and Narrondas Manordass v. Commissioner of Income-tax [1957] 31 ITR 909 (Bom), that the Appellate Assistant Commissioner had no jurisdiction under section 31(3) " to assess a source of income which has not been processed by the Income-tax Officer " and that--See [1967] 66 ITR 443, 451 (SC) : " ....... it is not open to the Appellate Assistant Commissioner to travel outside the record, i.e., the return made by the assessee or the assessment order of the Income-tax Officer with a view to find out new sources of income and the power of enhancement under section 31(3) of the Act is restricted to the sources of income which have been the subject-matter of consideration by the Income-tax Officer from the ....