1986 (4) TMI 16

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....alance-sheet under the head " Adjustment of capital reserve on account of machinery sold ". The auditor of the assessee gave a notice on the said item stating, inter alia, as follows: " No profit or loss on the sale of machinery and plant for Rs. 5,28,390 could be ascertained in the absence of the original cost and/or written down value of the assets sold. The sum of Rs. 5,28,390 has been adjusted against the amount of revaluation done as on June 30, 1965." In assessing the assessee to income-tax for the said assessment year, the Income-tax Officer included the said amount of Rs. 5,28,390 as profits arising on the sale of machinery. He noted that the written down value of the said machinery could not be ascertained. The assessee pr....

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....of the said ground. Before the Tribunal, it was contended on behalf of the assessee that though this ground was not raised before the Appellate Assistant Commissioner in the relevant assessment year, the very same ground was raised before the Appellate Assistant Commissioner in the earlier assessment year 1970-71. The said ground was also raised before the Tribunal in the said earlier assessment year and was disposed of in favour of the assessee. It was submitted that as the facts and circumstances were the same, the Tribunal should give the same decision also in the relevant assessment year. It was further submitted on behalf of the assessee that the material facts relating to the said ground were on record, viz., the balance-sheet, the....

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....d deleted the addition of the said sum of Rs. 1,34,246. Following its earlier decision, the Tribunal directed deletion of the addition of Rs. 5,28,390. On an application of the Revenue under section 256(1) of the Incometax Act, 1961 (" the Act "), the following questions stated to be questions of law arising out of the order of the Tribunal have been referred for the opinion of this court: "1. Whether the Tribunal could entertain a ground which was not urged before the Income-tax Officer and the Appellate Assistant Commissioner ? 2. Whether the Tribunal's interpretation of section 41(2) of the Income-tax Act, 1961, was correct?" So far as question No. 1 is concerned, it appears to us that the evidence and material relevant to th....