TaxTMI 
TaxTMI 
1997 (9) TMI 8
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....th the power of rectification under section 154. In the assessment made under section 143 of the Act there had not been included in the assessee's income the amount of tax paid on behalf of the assessee by the ONCC to the Department. That tax paid was sought to be included by rectification. Thus, in the first batch of appeals the main point before the Tribunal was whether such an exercise of inclusion could be undertaken by way of rectification. In the second batch of appeals also the tax paid on behalf of the assessee was again under consideration but in a different light. The issue here was whether the tax paid on behalf of the assessee would be taken 100 per cent. as gains of business or profession (as would ordinarily be the case in the case of an ordinary citizen not engaged in oil exploration) or whether 10 per cent. of such tax would be taken as profits and gains of business, such tax paid being connected inextricably with the fees paid in regard to services rendered for oil exploration, or thirdly whether the tax paid on behalf of the assessee could at all be included in the profits and gains of the profession or business. The third and last view arises out of the specia....
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....epartment, submitted that in the case of Emil Webber v. CIT [1993] 200 ITR 483, the Supreme Court has given a pronouncement which is extremely helpful in dealing with the situations where tax is paid by a third party on behalf of the assessee. That case is Emil Webber's case [1993] 200 ITR 483 (SC). There the tax paid on behalf of the assessee, who worked as a foreign personnel for setting up a manufacturing plant in India, was declared by the Supreme Court to be in effect, and falling within the inclusive definition of income given in section 2(24) of the Act. Mr. Agarwal submitted that if there is a Supreme Court's decision on a point, then and in that event the matter is laid thereby beyond all doubt or dispute. A rectification made on the basis of a Supreme Court pronouncement is, therefore, although a technical matter and might also be a complicated matter, yet it is a matter beyond debate, doubt or dispute as the Supreme Court itself has laid the matter at rest. With this proposition there is no dispute. But the case of Emil Webber v. CIT [1993] 200 ITR 483 (SC) admittedly came a long time after the rectification orders were passed. It is not that the case of Emil Webber v....
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....h respect, this is again a logical fallacy. If it is a matter of debate and dispute whether the jurisdiction under section 154 was originally used in a matter which is debatable or disputable or not, then the original matter itself is thereby immediately branded as one on which there can be debate or dispute. The rule in regard to the first question, therefore, must be discharged. The second question arose out of this fact that the point of the rectifying officer having no jurisdiction to rectify under section 154 was not raised before the first appellate authority. It was raised before the Tribunal and the point succeeded before the Tribunal. The Department would, therefore, have us refer the question whether the Tribunal was entitled to allow the raising of a new ground for deciding the appeal. But the second question as framed before the Tribunal in the application under section 256(1) of the Act reads whether the Tribunal was justified in law in allowing new evidence, the word "ground" was not used. It was not a matter of mere error or slip or a stenographer's error where ground is somehow mistyped as "evidence". The ground of additional evidence was pressed as such. The Tr....
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....y suppressed or some such disentitling factor can be shown against that party, the additional ground might be refused to be taken by the party before the Appellate Tribunal. But, ordinarily, a pure point of law is usually allowed to be taken. Mr. Dastur gave us the Supreme Court's decision in the case of CIT v. S. Nelliappan [1967] 66 ITR 722. The right of the Tribunal to give relief to the assessee to urge new grounds is taken note of in that case. The rules themselves permit such relief to be granted in appropriate cases by appropriate use of discretion. Thus the matter of taking of a new ground not being challenged before the Tribunal at all, interference by us in this regard at this stage would be thoroughly unjust and unlawful. The third question relates to the amount of tax payable by the assessee on the amount of tax which was paid on behalf of the assessee. Let us make things clear by giving hypothetical figures. The percentage of tax prevalent at the material time was 65 per cent. If the fees of the assessee came to be hundred (we are intentionally not mentioning rupees, dollars, lakhs or crores), the section 44BB taxable profit would be 10. The tax on that would be 6.5.....
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.... other words, the tax should be 65 per cent. on 6.5 and not 65 per cent. on 0.65. With respect, this contains a fundamental fallacy. Once a non-resident supplier of machinery comes within the purview of section 44BB, it cannot come again under the purview of the other parts of the Act dealing with profits and gains of business or profession. It cannot be said that the assessee is liable to 10 per cent. of the profits and gains under section 44BB and is liable to 100 per cent. under the other parts of the Act which makes profits and gains liable to tax. If section 44BB operates, it operates to exclude altogether the incidence of tax on profits and gains of business or profession which would otherwise be incidental on the basis of the other sections apart from section 44BB. In Emil Webber's case [1993] 200 ITR 483 (SC), referred to above, the Supreme Court considered income from other sources. This also cannot be made applicable in regard to the tax paid on behalf of the assessee. The words of that section, in the very beginning clarify that income on other account is to be taken as provided and it is not excluded from the total income under the Act. If there is an exclusion under ....