TaxTMI 
TaxTMI 
1981 (7) TMI 9
X X X X Extracts X X X X
X X X X Extracts X X X X
....leted the assessments without computing the statutory relief allowable to the assessee under s. 80J(3) of the I.T. Act, 1961, with regard to the assessee's new Foil Mill Unit at Kalwa, and to carry forward such deficiency for adjustment against future profits. The original assessment had been completed by the ITO under s. 143(3) of the Act on 21st March, 1972. It appears from the order of the Appellate Tribunal, where the matter went up finally, that the assessee had not claimed any relief either under s. 84 or under s. 80J. for the carry forward of deficiency in the applications under s. 154 in respect of the unit. In the returns also the assessee did not make any claim under s. 84 or under s. 80J and even during the assessment proceedings, the Tribunal observed, no such claim was put up by the assessee before the ITO. This is a finding of fact recorded by the Tribunal in the instant case which has not been challenged. Learned advocate for the assessee, however, drew our attention to the grounds of appeal from the order of the ITO to rectify the assessments under s. 154 wherein the assessee had contended, inter alia, as follows : " (iv) The ITO was wrong to observe that no clai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial years. In the first application for the assessment year 1967-68, the other applications being more or less in identical terms, the assessee stated as follows : " While passing the order under section 143(3) dated 21st March, 1972, you appear to have forgotten to ascertain the statutory relief or deficiency allowable to the assessee in accordance with section 84 of the Act with regard to the Foil Unit at Kalwa and to carry the deficiency forward. We, therefore, request you to kindly ascertain the deficiency and let the assessee have the benefit of the carry forward, thereof, by using your jurisdiction under section 154 of the Act. A computation of the relief under section 84 for the relevant year is annexed herewith." Thereafter the assessee referred to the capital employed at the New Foil Mill at Kalwa as on 1st January, 1966, viz., Rs. 3,26,78,847 and 6% of the capital employed, Rs. 19,60,730. Beyond that no further particulars were given. It appears that thereafter on or about 19th April, 1974, the assessee filed a further clarification wherein the assessee stated, inter alia, as follows: " 1. The relief/rebate under section 80J/84 was not shown in the return a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reference is made to the application which appears at p. 177 of the paper book and which is dated 6th April, 1967. But there was no mention of any profit as indeed there was no profit from the said Unit which is under dispute here, that is to say, the new foil mill unit at Kalwa. The certificate under s. 197(3) naturally did not refer to any profit of the said new foil mill unit at Kalwa. The certificate was as follows : " Certificate According to the information supplied the directors of Indian Aluminium Company Limited at their 190th meeting held on 12th February, 1968, resolved that a final dividend of Re. 1.00 on each ordinary share of the company (to be proportionately on shares partly paid), over and above the interim dividend of Rs. 0.75 paid earlier in November, 1967, to the holder of the ordinary shares and also of Rs. 6.25 subject to income-tax payable by the company on each preference share of the company as on 28th May, 1968, will be paid in respect of the year ended 31st December, 1967. On a representation made to me and on the basis of figures supplied by the company I hereby certify (provisionally subject to final assessment) that 11.59 per cent. of the said d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... about foil mill. In para. 1 of the said petition it was stated as under: 'Your certificate was sought in respect of the profits earned in 1966 at only two new undertakings, viz., Belur-II and Alupuram."' It appears that it was further contended before the ITO in the application under s. 154 that the relief under s. 84/80J(3) was not shown in the return for the material year as there was no provision in the return form to indicate the amount of relief to be carried forward and in the assessee's application for certificate under s. 197(3) of the Act dated 6th April, 1967, according to the assessee, it was not only indicated that the relief under s. 84/80J(3) would be available to the new foil mill at Kalwa but also mentioned the quantum of relief allowable according to its calculation. We, however, have not been able to find from the certificate any reference to any profit from the new foil mill unit at Kalwa as it could not be, as indeed there was no profit in that year. The form of return was changed from the assessment year 1972-73 to provide for certain claims according to the assessee. That application was the first application made by the company after s. 80J(3) was enac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the computation filed along with the return was only the computation of assessable income where the question of mentioning the deficiency did not arise. The ITO, it was contended, was wrong to observe that no claim with regard to deficiency to be carried forward in respect of the new foil mill had been made before the assessment or at the assessment stage but mere non-agitation of the point before the AAC, on an appeal, did not take away the assessee's right to claim the sum under s. 154 of the Act and the ITO, according to the assessee, was wrong to observe that there was no mistake apparent from the records because, according to the assessee, in the instant case " records " included and consisted of records also of the proceedings ending with the grant of the certificate by the ITO under s. 197(3) of the Act. Several decisions were referred to. The AAC, however, did not agree with all the submissions and held that there was no proper claim made under s. 84/80J(3) of the I.T. Act in respect of the assessee's new foil company unit at Kalwa and as such, according to the AAC, there was no apparent mistake from the records. He, accordingly, dismissed the assessee's appeal. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the applicant-company should have claimed the relief under section 84 of the Income-tax Act, 1961, in support of its new foil mill unit at Kalwa in the return form when the same did not provide for the same ? (d) Whether, on the facts and in the circumstances of the case, the Tribunal did not err in appreciating the facts and issues involved in the Anchor Pressings (P.) Ltd. v. CIT [1975] 100 ITR 347 (All), and in applying the ratio of that judgment to the applicant's case ? (e) Whether, on the facts and in the circumstances of the case, the Tribunal did not misdirect itself in law in not appreciating that the power to rectify a mistake apparent on the 'records' in accordance with section 154 of the Income-tax Act, 1961, is also coupled with a duty to exercise that power for the ends of justice and whether the Tribunal is right in law in ultimately holding that the applicant's instant case did not deserve the exercise of that power as a duty towards the applicant ? " The question, therefore, basically is whether in the facts as we have mentioned hereinbefore and as found by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is the statutory obligation of the ITO to grant relief irrespective of whether any such claim was made or not. But in a case where the grant of such a relief was dependent on certain particulars being available before the ITO and upon consideration, on certain facts, where the assessee had not placed materials for consideration of such facts, the question is whether the granting of such relief was obligatory on the part of the ITO, and whether in the absence of such materials in not granting such a relief, had the ITO committed any mistake at all. This question, in our opinion, has been quite clearly dealt with by the Gujarat High Court in the decision in the case of Chokshi Metal Refinery v. CIT [1977] 107 ITR 63 (Guj). There, the assessee was a registered firm and was carrying on the business of refinery at Surat. The business was started in February, 1963. The order of assessment for the assessment year 1967-68 was passed on the 1st March, 1968, and the total income computed was Rs. 1,49,863. The assessment order for the assessment year 1968-69 was passed on the 14th February, 1969, and the total income computed was Rs. 1,57,570. On 27th February, 1970, the assessee applied to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ested with the assessee, the ITO should have drawn the attention of the assessee to the relevant sections, viz., s. 84/80J to which the assessee appeared to have been clearly so entitled to claim. But, as we have mentioned before, the main question will be, whether all the materials were there for which relief could be granted. The fact that regarding the applicability of either s. 84 or s. 80J there is a good deal of scope for debate was also expressed in the case of Jiyajeerao Cotton Mills Ltd. v. ITO [1977] 107 ITR 253 (Cal). It is true, as the learned advocate for the assessee pointed out, that that case dealt entirely with the applicability of s. 84 by the ITO, but, as was noted by the learned judge, the provisions of ss. 84 and 80J were identical. In this connection on behalf of the assessee reliance was placed very strongly on the observations of the Division Bench of this court in the case of Indian Aluminium Co. Ltd. v.CIT [1980] 122 ITR 660 (Cal). That was the case of the assessee in respect of the assessment for the assessment year 1970-71. The questions posed before the court on s. 80J were as follows (pp. 665-666): " 1. Whether, on the facts and in the circumstances....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d actually earned a profit. We, therefore, hold that the AAC went wrong in holding that the assessee's claim could not be entertained in the year under appeal. The next question arising for our consideration is as to whether the ITO is entitled to examine the matter again and hold whether the Kalwa unit is at all entitled to the relief under section 80J. We find that the ITO dismissed the claim of the assessee summarily stating that it did not fall within the purview of section 80J. The AAC endorsed this by stating that the primary condition had not been satisfied. We are unable to read in their orders as to which particular condition of the section had not been satisfied. We find it was a newly established undertaking as per the licence issued by the Govt. of India on 18th September, 1961. Entirely the assets were acquired for this new unit for which the financial resources were issue of rights shares, debentures and loan from Commonwealth Development Finance Corporation. We were told that the undertaking employed more than 10 workers and the manufacturing process was carried on with the aid of power. Ordinarily these facts should be sufficient to entitle the assessee to the cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a claim. In those circumstances, there could not have been any prior determination of claim for carry forward of loss or deficiency and in those circumstances the assessee was entitled to relief. The facts with which we are concerned were not there. The question whether not having claimed depreciation before after the coming into operation of the Finance (No. 2) Act, the assessee was entitled to claim set-off in a year where profit had been earned or whether it was entitled to carry forward the deficiency for the purpose of setting off is different from the question with which we are concerned, that is to say, in respect of the years in which there was no profit but only loss. Therefore, in our opinion, the ratio of the said decision would not be applicable to the facts of the instant case, especially when we have to bear in mind the facts found by the Tribunal in the instant year, as we have set out hereinbefore. Another aspect which may be referred to is that though the court proceeded on the basis that there was no procedure laid down in the Rules, it was not quite clear whether the attention of the court had been drawn to Pt. II of the I.T. Rules, 1962, for the relevant year w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evious year's assessment. Therefore, the assessment records of the previous year would be the records contemplated under s. 35 of the Indian I.T. Act, 1922, under s. 154 of the I.T. Act, 1961. But the position of certificate under s. 197(3) is entirely different. Under the law before paying out dividend a company is under a statutory obligation to deduct certain percentage but in case certain companies fulfil certain conditions a provisional certificate entitling the company not to deduct the tax at a particular rate is given so that the company is under no obligation in those circumstances to deduct the tax and the assessee gets the benefit of that certificate. At that stage the certificate is provisional. At that stage there is no enquiry as to the conditions required for grant of such certificate. In the instant case, however, we have seen the application for the grant of the certificate under s. 197(3). That certificate had nothing to do with the foil mill unit at Kalwa because in the relevant years the foil mill unit was not making any profit. Therefore, no question of declaring any dividend, arising out of the profits made out of the operation of this unit, arises. Therefore,....