1. It is necessary at the very outset to mention that the assessee in the course of hearing before the Tribunal filed for this year additional ground of appeal, which reads as under : 13. Because the liability for payment of interest amounting to Rs. 3,49,659 under the Levy Sugar Price Equalisation Fund Act, 1976 in relation to the sugar production year 1972-73 should be allowed.
It was argued by the learned representative of the assessee that the additional ground be admitted for consideration as this ground had been taken shortly after the order of the Tribunal for the immediately preceding year, namely, assessment year 1977-78 was passed in which the Tribunal held that out of interest claimed by the assessee in that year of Rs. 8,77,721, Rs. 3,49,649 related to the assessment year 1978-79.
It was stated that in the said order of the Tribunal dated 6-4-1985 in paragraph 34 the Tribunal mentioned as under : 34. We do not agree that with reference to all these realisations, the assessee's case is governed by Clauses (4) and (5) of Section 3 of the Equalisation Fund Act as was canvassed by the learned departmental representative before us. We, however, find that the interim order relating to realisation of Rs. 8,77,721.06 was vacated by the High Court only on 20-10-1976. This date falls in the assessment year 1978-79. In other words, Clauses (4) and (5) of Section 3 of the Equalization Fund Act were applicable to the above amount on 30-9-1976, the last date of the account year relevant to the assessment year under appeal. The interest of Rs. 3,49,659 relating to the sum of Rs. 8,77,721.06 was not, therefore, liable to be credited to the fund in the year under appeal and cannot be allowed as deduction from the profits of this year. It is an expenditure which relates to the assessment year 1978-79. The other interim orders had been vacated by the end of the year under appeal and the liability referable to them had accrued in this year. Our finding, therefore, is that the assessee will be entitled to the deduction of Rs. 5,47,062.96 or Rs. 5,47,063 (Rs. 8,96,722 - Rs. 3,49,659) and we direct accordingly.
It was, thus, argued that the assessee had claimed interest of Rs. 8,96,722 in the assessment year 1977-78. This amount was interest, which according to the assessee, was the responsibility of the assessee to pay as per provisions of the Levy Sugar Price Equalisation Fund Act, 1976. The assessee claimed this amount as deduction in the assessment year 1977-78 and ultimately the Tribunal vide order dated 6-4-1985 held that out of Rs. 8,96,722, Rs. 5,47,063 should be allowed to the assessee out of the profits of the assessment year 1977-78 and with regard to the balance of the amount of Rs. 3,47,659 it was held that the amount pertained to the assessment year 1978-79. Shortly after the receipt of this order of the Tribunal the assessee, who by this time had not claimed this amount before the authorities below for being allowed against the profits of this year, claimed this amount before the Tribunal as the appeal of the assessee for the assessment year 1978-79 was pending before the Tribunal. Thus, the case of the assessee is that the assessee never knew earlier that a portion of the amount claimed in the assessment year 1977-78 would be held by the Tribunal to be relevant to the assessment year 1978-79 and the assessee was under a bona fide belief that the whole of the amount in the assessment year 1977-78 should be allowed out of the profits allowed in the assessment year 1977-78. As soon as the assessee came to know of the said order of the Tribunal it took immediate steps to file the additional ground as the appeal before the Tribunal for the assessment year 1978-79 was pending. Thus, it was argued that the assessee was prevented by sufficient cause from not taking up this claim of deduction either in the return of income or before the authorities below. It also could not take up this ground originally when the appeal was filed before the Tribunal. Only after the appellate order of the Tribunal for the immediately preceding year was received by the assessee, the assessee took immediate steps to file the additional ground of appeal before the Tribunal. It was, thus, argued that this additional ground of appeal should be admitted for consideration on merits in this year in spite of the fact that this ground was not taken earlier nor was it taken before the authorities below.
2. The departmental representative argued that this ground of appeal was not taken up at any time before the authorities below and should not be admitted for consideration at this stage. It was further emphasised that this claim was not even made in the return of income.
The departmental representative relied upon in this connection on the decision of the Tribunal Delhi Bench 'A' (Special Bench) in National Thermal Power Corporation v. IAC [1985] 12 ITD 99. It was argued relying on the said decision of the Tribunal that the claim made in the additional ground now filed fell outside the subject-matter of appeal as the relevant issue was never raised before the authorities below.
Reliance was also placed on the following decisions - Panchura Estate Ltd. v. Government of Madras [1973] 87 ITR 698 (Mad.), CIT v. Steel Cast Corporation [1977] 107 ITR 683 (Guj.), Hukumchand Mills Ltd. v.CIT [1961] 63 ITR 232 (SC) and CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC). Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1. It has been argued by the departmental representative that the issues are fully settled by the said decision of the Tribunal in National Thermal Power Corpn.'s case (supra) and the same should be followed.
3. The representative of the assessee argued that the case laws quoted by the departmental representative were not wholly relevant. The decision of the Special Bench of the Tribunal, Delhi could not be wholly relied upon here as the decision of the Allahabad High Court which is binding here is contrary one. It is argued that exactly similar issues were there before the Allahabad High Court in the case of CIT v. Hindustan Commercial Bank Ltd. [1980] 122 ITR 645. The facts in this case before the Allahabad High Court were as mentioned in the said decision as under : The assessee had written off a sum of Rs. 18,086 as a bad debt in the previous year relevant to the assessment year 1965-66 and claimed its deduction. While disposing of the appeal the Tribunal observed on facts that the assessee would be at liberty to claim it in the subsequent year, if the facts stated by the assessee before the Tribunal were found to be correct by the lower authorities. In the assessment year 1966-67, the assessee did not make any claim for the bad debt before the ITO or the AAC. At the time when the appeal was filed before the Tribunal no ground relating to deduction of any amount of bad debt was taken in the memorandum of appeal. However, as soon as the appeal for the assessment year 1965-66 had been disposed of, the assessee made an application for deduction of Rs. 8,086 as bad debt before the Tribunal by making an application for the addition of a ground in the memorandum of appeal. The claim was scaled down to Rs. 8,086 because the assessee had recovered an amount of Rs. 10,000. The Tribunal admitted the additional point and allowed the claim of the assessee. On a reference : Held, that the Tribunal was justified in permitting the assessee to urge the additional ground and allowing the amount of Rs. 8,086 as bad debt. (p. 646).
It was argued that in this case also a sum was claimed as bad debt in the assessment year 1965-66. The Tribunal ultimately held the same relevant to the assessment year 1966-67, but by that time the assessee's appeal for the assessment year 1966-67 was already disposed of by the AAC. The assessee had not made this claim in the assessment year 1966-67 before the authorities below. However, as soon as the assessee received the order of the Tribunal for the assessment year 1965-66, the assessee made a petition before the Tribunal for inclusion of the additional ground relating to the claim of this bad debt for consideration. The Tribunal admitted this additional ground and allowed the claim. The High Court held that the Tribunal was justified in permitting the assessee to urge the additional ground and allowing the claim. It was contended that the facts before us were exactly identical and the decision of the Allahabad High Court on this issue was binding here which was not there in Delhi (sic). It was, thus, argued that the said decision of the Allahabad High Court should be followed.
4. Further, it was argued that the Tribunal had power of widest amplitude to deal with any point which was the subject-matter of appeal. In this connection, it was argued that the assessee has already urged in its ground of appeal an issue relating to the deduction of interest of Rs. 65,000. Claim of further deduction of interest was only an extension of the said claim of deduction of interest. It was contended that the claim of interest was already the subject-matter of appeal and the assessee could claim for a larger deduction under the head which was already there before the authorities below. It was argued that the Tribunal being the final fact finding authority should consider such claim as had been held in these cases - Madhu Jayanti (P.) Ltd. v. CIT [1985] 154 ITR 277 (Cal.), CIT v. Sri Rajagopal Transports (P.) Ltd. [1983] 144 ITR 573 (Mad.), CIT v. Madras Industrial Investment Corporation Ltd. [1980] 124 ITR 454 (Mad.) and P.R. Mukherjee v. CIT [1979] 116 ITR 554 (Cal.).
5. It was also argued that the Tribunal had the authority to adjust the tax liability of the assessee in the light of its finding. Thus, the Tribunal in view of its appellate order for the assessment year 1977-78 had the authority to adjust the correct liability of the assessee for the assessment year 1978-79 as well according to its earlier finding.
On this account, the Tribunal should admit the additional ground in the peculiar facts of the case. Reliance was placed in. this connection on the following case laws - CIT v. S. Nelliappan [1967] 66 ITR 722 (SC), Atlas Cycle Industries Ltd. v. CIT [1982] 133 ITR 231 (Punj. & Har.) and Oil India Ltd. v. CIT [1982] 135 ITR 713 (Cal.).
6. Further, it was argued that purely legal plea could be raised at any stage as per finding given in the following cases - Krishna Gopal Bhadra v. ITO [1980] 124 ITR 580 (Cal.) and CWT v. B. Kempanna [1980] 126 ITR 825 (Kar.).
7. With regard to the case of the Hon'ble Supreme Court in Gurjargravures (P.) Ltd.'s case (supra) which has been relied upon by the departmental representative, it has been argued that this case was noted by several High Courts and there is unanimity of view that if the relevant material was on record, the additional plea could be raised and admitted. In this case reliance was placed on the following cases- CIT v. Gangappa Cables Ltd. [1979] 116 ITR 778 (AP), Addl. CIT v.Sheetalaya [1979] 117 ITR 658 (All), Krishna Gopal Bhadra's case (supra), Atlas Cycle Industries Ltd.'s case (supra), Madhu Jayanti (P.) Ltd.'s case (supra) and CIT v. Western Rolling Mills (P.) Ltd. [1985] 156 ITR 54 (Bom.).
8. We have given our careful consideration to the facts of the case and the rival arguments on the issue of admissibility of additional ground of appeal taken. We agree with the contention raised by the learned representative of the assessee that this issue is wholly covered by the decision of the Allahabad High Court in the case of Hindustan Commercial Bank Ltd. (supra). The decision of the Allahabad High Court is binding here. In our opinion, the facts in the case at present for consideration before us and the facts in the said case before the Tribunal were exactly identical. Respectfully following the decision of the Allahabad High Court on the said issue, we admit the said additional ground of appeal taken before us for consideration. However, as this ground has not been considered by the Commissioner (Appeals), the issue is referred to the Commissioner (Appeals) for being considered and decided at his end, keeping in view the decision of the Tribunal in the assessment year 1977-78.
9 to 16. [These paras are not reproduced here as they involve minor issues.]