Sikkim Janseva Pratisthan (P.) Vs. Dy. Cit, Spl. Range-26 - Court Judgment

Excerpt:
all the above appeals by the assessee are directed against common order of commissioner (appeals)-i, new delhi dated 6-11 -1998 for assessment years 1992-93 to 1995-96.briefly the facts are that the assessee -company is deriving income from dividend and interest etc. the assessee-company was treated as foreign company in the earlier years. even for the assessment years under reference, the assessee had admittedly filed returns in the status of a foreign company. however, the assessee-company has shown income from dividend and interest and in the computation of total income, the assessee-company has claimed the deduction under section 80gga(a)(ii) of the income tax act on account of contributions made to various institutions approved for the purpose of deductions under section 35(1)(ii) of the income tax act. the assessing officer was of the view that since the assessee-company is a foreign company, the same was liable to tax at the rate of 25 per cent on gross amount of dividend, interest income etc. as per the provisions of section 115a.he also observed that the deduction under chapter vi-a are not permissible to the assessee-company. the assessing officer accordingly passed the order against the assessee. the assessment orders for the assessment years 1992-93,1993-94 and 1995-96 were passed under section 143(3) of the income tax act. however, for assessment year 1994-95 the return was processed under section 143(1)(a) of the income tax act and the status of assessee-company was taken as foreign company as declared in the returns. during the course of arguments learned counsel for the assessee conceded that the assessee had disclosed its status in the returns to be a foreign company. however, the commissioner (appeals) has mentioned that the assessee has shown its status to be of domestic company in the return of income. learned counsel for the assessee also submitted that though commissioner (appeals) has mentioned that in assessment year 1993-94 return was processed under section 143(1)(a) but in fact, the assessment order was passed under section 143(3) of the income tax act. before commissioner (appeals) the counsel for assessee has agitated the determination of income and taxing thereto in the status of foreign company. the commissioner (appeals) considering the earlier order was of the view that assessee is a foreign company and as such deduction under sections 8og and 8ogga are not available to foreign company. the commissioner (appeals) accordingly upheld the assessment orders /intimation of the above assessment years and dismissed all the appeals of the assessee.the assessee has now brought the issue in appeals before us on different grounds of appeal.the learned counsel for the assessee, however, submitted that assessee has filed applications for admission of an additional ground in all the appeals, which reads as under: "without prejudice to the grounds of appeal taken up in the original grounds of appeal, the learned cit (appeals) and the assessing officer erred in treating the appellant company as a'foreign company'instead of a domestic company.the learned cit (appeals) and the assessing officer failed to correctly interpret the provisions of section 2(26) of the act which defines 'indian company'. they failed to take cognizance of the fact that sikkim was annexed to india some time in 1975 and, therefore, become a part and parcel of the indian territory. the learned cit (appeals) and the assessing officer failed to appreciate that by notification no : so 148(e), dated 23-2-1989 the income tax act, 1961 was extended to the state of sikkim with effect from 1-4-1989, i.e., assessment year 1989-90 and subsequently by section 26 of the finance act, 1989 the date was postponed to 1-4-1990, i.e., assessment year 1990-9 1.accordingly, all companies registered in the state of sikkim were to be treated as 'domestic company' effective from the assessment year 1990-91" learned counsel for the assessee in support of the additional ground of appeal submitted that assessee was a non-trading company and has income from dividend and interest etc. he has further submitted that the assessee has given donations to various specified institutions. he has further submitted that though the assessee has disclosed the status to be a foreign company in the returns of income, but in fact assessee is the domestic company and as such entitled for deductions under section 80gga of the income tax act. learned counsel for the assessee in support of his contention filed the opinion of shri v.h. patil, advocate, supreme court. learned counsel for the assessee relied on the same, and submitted that assessee is a private limited company registered as a company limited by guarantee under the registration of companies act sikkim, 1961 on 10- 10- 1984. the registered office of the company is situated in state of sikkim, m.g. marg, gangtok. the law relating to incorporation of companies is called the registration of companies act sikkim, 1961 which came into force by notification under sikkim darbar gazette, january 1962, part-v. he has submitted that the objects of the company which extend to the whole of india are to provide, relief to poor, education, medical relief and the advancement of say other objects of general public utility and other activities related thereto including research etc. as per clause 5(2) of the memorandum of association, there is a prohibition of distribution of dividend/ profits of the company to its members. he has further submitted that sikkim became a component state of the indian union by and under the constitution (36th amendment) act, 1975, which inserted article 371f in the constitution. clause (k) of that article provides that all laws in force immediately before the appointed day i.e., 26-4-1975 in the territory comprised in the state of sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent legislature or other competent authority. learned counsel for the assessee submitted that law relating to registration of companies under the sikkim act, 1961 has neither been repealed nor invalidated by the legislature. he further submitted that operation of the income tax act, 1961 was extended to the state of sikkim by notification issued under article 371f with effect from assessment year 1990-91. he, therefore, submitted that has submitted that assessee is an indian company as provided under section 2(26)(1) of the i.t. act.he has further submitted that as per provisions of section 6 of the income tax act, indian company is always a resident and the charge of income-tax will be in accordance with such residential status. he has submitted that since sikkim is now part of india and separate law was prevailing in respect of the registration of a company before sikkim became part of the indian union and the assessee is registered under the act of sikkim, therefore the assessee-company formed and registered under the sikkim laws relating to a company formerly in force in the state of sikkim which is now part of india, therefore, the condition that the company is formed and registered under any law relating to a company formerly in force in any part of india is satisfied. he has further submitted that same law still continues to govern the companies registered in that part of india is not relevant. he has submitted that the only relevant consideration is whether the company was registered under the law prevailing in that territory before it became part of india. learned counsel for the assessee further submitted that the indian company is regarded as a indian company if two conditions are fulfilled ie., first, if the company was formed and registered under any law relating to companies which was or is in force in any part of india and secondly, if the registered office of the company is in india. learned counsel for the assessee ultimately submitted that since sikkim is part of india and all the laws including income tax act are made applicable to the state of sikkim, the assessee became an indian company as defined under section 2(26)(1) of the income tax act.learned counsel for the assessee in support of the contention also filed copy of the notification under article 3 7 if by which income-tax was made applicable to the state of sikkim from 1-4-1989 i.e., assessment year 1989-90 and subsequent by section 26 of the finance act, 1989 the date was postponed to 1-4-1990 i.e., assessment year 1990-91 learned counsel for the assessee relied upon judgment of kerala high court in the matter of cit v. a.p. parukutty moopilamma (1984) 149 itr 131(ker) and order of itat delhi bench 'd' in the case of pasupati nath commercial (p.) ltd. v. cit(2002) 121 taxman 33 (mag.) and submitted that the status of the company to be determined each assessment year and description of the status by assessee himself is not conclusive. learned counsel for the assessee submitted that merely assessee has disclosed its status to be foreign company in the returns of income is not enough to conclude that assessee is a foreign company as is held in earlier assessment years. learned counsel for the assessee submitted that in earlier year itat delhi bench rejected the contention of the assessee vide order dated 25-4-2003 with regard to the determination of the tax liability retrospectively on higher rate of tax but the point with regard to determination of status was not decided as this point is agitated before the tribunal for the first time. learned counsel for the assessee further submitted that section 115a(4) is applicable from 1-4-1995, therefore, finding of the authority below are not correct. he has further submitted that tax rate cannot be made applicable retrospectively. learned counsel for the assessee further submitted that it was imperative for the authorities below to determine the correct status of the assessee in each assessment year and since sikkim is a part of india where assessee was registered as company and income tax act is applicable to the state of sikkim, the assessee is an indian company within the meaning of section 2(26)(i) of the income tax act. therefore, assessee is entitled for deduction under section 88gga of the income tax act. learned counsel for the assessee submitted that since this point is taken for the first time and all the facts are available on record, this point being legal in nature may be admitted for hearing. he has relied on the decision of hon. supreme court in the case of national thermal power co. ltd. v.cit (1998) 229 itr 383 (sc). learned counsel for the assessee submitted that the additional ground need no investigation of the facts and as such the same may be admitted for the purpose of disposal of the appeals. learned counsel for the assessee further submitted that he has no objection if the matter may be restored to the file of commissioner (appeals) for adjudication on additional ground of appeal.on the other hand, learned dr relied upon the order of the authorities below and submitted that additional ground is taken for the first time which was not taken before the authorities below. therefore, this issue was not adjudicated by the commissioner (appeals) and was also not examined by the assessing officer. therefore, the additional ground requires examination of the facts. accordingly, he opposed the admission of additional ground. learned dr, however, admitted sikkim is a part of india and income tax act is applicable to the state of sikkim.we have considered rival submissions of learned representatives of both the parties for the purpose of disposal of applications for admission of additional ground mentioned above and merits thereof. before dealing with this issue, we would like to mention that commissioner (appeals) mentioned in the impugned order that in assessment years 1992-93 and 1995-96 assessment orders under section 143(3) are under challenge.commissioner (appeals) also mentioned that in assessment years 1993-94 and 1994-95 the intimation under section 143(i)(a) was in dispute before him. however, considering the above submission and material on record, we are of the view that the position is not so as in assessment year 1993-94 the orders under section 143(3) was challenged before commissioner (appeals). only for the assessment year 1994-95 the intimation under section 143(1)(a) was in challenge. similarly, we find that commissioner (appeals) has mentioned in para 3 of the impugned order that in the return of income the status of the assessee has been shown as domestic company. however, learned counsel for the assessee has very fairly admitted before us that in fact assessee had shown the status in the return of income to be a foreign company but according to him this fact is not correct as the sikkim is part of india and income tax act is applicable and, therefore, assessee is domestic company as provided under income tax act. therefore, we first take up the matter for the assessment years 1992-93, 1993-94 and 1995-96 for the purpose of admission of the additional ground as mentioned above. the hon.supreme court in the matter of national thermal power co. ltd. (supra) held: "undoubtedly, the tribunal has the discretion to allow or not to allow a new ground to be raised. but where the tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that questioning order to correctly assess the tax liability of an assessee." on considering of the above facts it is clear that authorities below should have determined the status of the assessee in each year for the purpose of determining the tax liability of the assessee. merely because the assessee has shown the status to be of foreign company is not enough to conclude that assessee is a foreign company. similarly, merely because in earlier years the assessee has shown its status to be a foreign company is not enough to hold that assessee is a foreign company. the registered address of the assessee is available with the assessing officer, it is clear from the above facts that sikkim is a part of india. therefore, income tax act is applicable to the state of sikkim as per the notification referred to by the learned counsel for the assessee. even this fact is not disputed before us by learned dr.therefore, all the facts are available with the authorities below to verify the status of the assessee-company. since the deduction under section 80gga is clearly dependent on the findings given on the point of status. now if it is treated as foreign company apparently the deduction under section 8ogga would not be available. but if it is an indian company the assessee would be entitled to the same. therefore, determination of correct residential status of the company is very crucial and goes to the very root of the issues involved in the appeals. the point in issue as raised in the additional ground is clearly legal in nature and requires no investigation of fact and the same would also decide the correct tax liability of the assessee.considering the above facts and decision of hon. supreme court in national thermal power co. ltd. case (supra) we are of the view that in the interest of the justice the additional ground so raised deserves admission after all appeal proceedings are continuation of assessment proceedings and aims at determining the correct income and tax liability of the assessee. we accordingly admit the above additional ground in all the assessment years i.e., 1992-93, 1993-94, 1995-96.however, equally we are of the view since the point is raised for the first time before the tribunal, therefore, proper opportunities should also be given to the authorities below. therefore, instead of deciding the additional ground by the tribunal, we restore additional ground in all the above-mentioned assessment years to the file of commissioner (appeals) with direction to decide the same as per law after allowing reasonable opportunity of being heard to the assessee as well as assessing officer. the remaining ground of appeal are entirely dependent upon findings given on this issue as to whether the assessee is an indian company under the provisions of section 2(26) of the income tax act, therefore, we feel that the other grounds should also be restored to the file of commissioner (appeals) with direction to re-decide these grounds on merits for deduction under section 80gga after determining whether the assessee was an indian company or a foreign company, we accordingly set aside the orders of commissioner (appeals) and restore all these appeals to his file for de novo orders both on additional ground on merits and remaining issues raised in appeals before us after allowing a reasonable and sufficient opportunity of being heard to the assessee as well as assessing officer. as a result the appeals of the assessee in ita nos. 451, 452 and 454 of 1999 for assessment years 1992-93,1993-94 and 1995-96 are allowed for statistical purpose.now we take up ita no. 453 of 1999 for assessment year 1994-95. in this year admittedly the assessee has shown status in the return of income to be a foreign company. the assessing officer on the basis of information contained in the return of income processed the return under section 143 (1)(a) and did not allow deduction to the assessee under section 80gga of the income tax act treating it to be a foreign company, as the deduction was not available because of applicability of provisions contained in section 11 5a of the income tax act. section 143(1)(a) as was applicable to the year under appeal read as under:- "(1)(a) where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum sopayable,and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, in prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, in prima facie inadmissible, shall be disallowed: provided further that an intimation shall be sent to the assessee whether or not any adjustment has been made under the first proviso and notwithstanding that no tax or interest is due from him : provided also that an intimation under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable." the above provision clearly shows that assessing officer could make prima facie adjustments to the income or loss declared in the return on the basis of information available in such returns, accounts or documents which is prima facie admissible but which is not claimed in the return, shall be allowed. therefore, it was necessary for the assessee to give complete information in the return of income and if the facts are clear than the assessing officer could make prima facie adjustment to allow the necessary relief even though not claimed in the return. admittedly in this case assessee has shown the status to be of foreign company. therefore, at the time of processing the return assessing officer was bound to take the status as a foreign company as declared in the returns and, therefore, rightly did not allow deduction under section 80gga because of applicability of provision of section 115a of the income tax act. as per provisions of section 143(1)(a), and information available on record at the time of processing the return under section 143(1)(a), the assessing officer could have not suo motu changed the status to a domestic company such course of action does not fall within the purview of prima facie adjustments mentioned under section 143(1)(a). we, therefore, do not find any merits in the submission of assessee with regard to admission of the additional ground in the assessment year 1994-95. the application for admission of additional ground in the assessment year 1994-95 is accordingly dismissed. different grounds are taken in the grounds of appeal on merits in the assessment year 1994-95. no specific submission is made before us challenging the orders of the authorities below. it is only stated that section 115a(4) is applicable with effect from 1-4-1995, therefore, the same was applicable for and from assessment year 1995-96. it was further submitted in the ground that the said amendment having prospective effect cannot be applied to the earlier assessment years and as such the assessee-company was eligible for the deduction under section 80gga of the act for assessment year 1994-95 under appeal. it was merely submitted that the appeal of the assessee was pending for assessment year 1991-92 before itat. however, the assessing officer disallowed the deduction under section 80gga as was confirmed by commissioner (appeals) for early years. the appeal for assessee for assessment year 1991-92 was dismissed by itat delhi bench 'b' by order dated 25-4-2003. section 115a of the income tax act relates to income of foreign company and provides the amount of income-tax calculated at fixed rate. it did not provide for deduction under chapter vi-a. the assessee offered income for tax purposes at the rate of 25% in computation of income filed with the return of income. the relevant provision of law inserted by amendment from 1-4-1995 under section 115a could be referred to in order to get clarification and intention of the legislature in introducing such provision in the law. the assessee could have filed revised return under section 139(5) of the income tax act if discover any omission or wrong statement in the return of income in prescribed time but assessee failed to do so and on the basis of earlier years orders filed return of income in the status of foreign company. the assessing officer on such information available in the return of income, accounts and documents processed the return of income in accordance with the provision of section 115a of the income tax act.in our view the assessing officer rightly disallowed the claim of assessee for deduction under section 80gga as it was prima facie inadmissible in law in the facts and circumstances of the case and on the basis of material available on the record while processing the return under section 143(1)(a). we therefore, do not find any irregularity or illegality in the orders of the authorities below in taking such view against the assessee. we, therefore, in this view of the matter and considering the fact that return was processed under section 143(1)(a) on the basis of information contained in the return of income, we do not find any justification to interfere in the orders of the authorities below in the assessment year 1994-95. this appeal of the assessee is dismissed.as a result, appeals of the assessee for assessment years 1992-93, 1993-94 and 1995-96 are allowed for statistical purpose and appeal for assessment year 1994-95 is dismissed.

Judgment:
All the above appeals by the assessee are directed against common order of Commissioner (Appeals)-I, New Delhi dated 6-11 -1998 for assessment years 1992-93 to 1995-96.

Briefly the facts are that the assessee -company is deriving income from dividend and interest etc. The assessee-company was treated as foreign company in the earlier years. Even for the assessment years under reference, the assessee had admittedly filed returns in the status of a foreign company. However, the assessee-company has shown income from dividend and interest and in the computation of total income, the assessee-company has claimed the deduction under section 80GGA(a)(ii) of the Income Tax Act on account of contributions made to various institutions approved for the purpose of deductions under section 35(1)(ii) of the Income Tax Act. The assessing officer was of the view that since the assessee-company is a foreign company, the same was liable to tax at the rate of 25 per cent on gross amount of dividend, interest income etc. as per the provisions of section 115A.He also observed that the deduction under Chapter VI-A are not permissible to the assessee-company. The assessing officer accordingly passed the order against the assessee. The assessment orders for the assessment years 1992-93,1993-94 and 1995-96 were passed under section 143(3) of the Income Tax Act. However, for assessment year 1994-95 the return was processed under section 143(1)(a) of the Income Tax Act and the status of assessee-company was taken as foreign company as declared in the returns. During the course of arguments learned Counsel for the assessee conceded that the assessee had disclosed its status in the returns to be a foreign company. However, the Commissioner (Appeals) has mentioned that the assessee has shown its status to be of domestic company in the return of income. Learned Counsel for the assessee also submitted that though Commissioner (Appeals) has mentioned that in assessment year 1993-94 return was processed under section 143(1)(a) but in fact, the assessment order was passed under section 143(3) of the Income Tax Act. Before Commissioner (Appeals) the counsel for assessee has agitated the determination of income and taxing thereto in the status of foreign company. The Commissioner (Appeals) considering the earlier order was of the view that assessee is a foreign company and as such deduction under sections 8OG and 8OGGA are not available to foreign company. The Commissioner (Appeals) accordingly upheld the assessment orders /intimation of the above assessment years and dismissed all the appeals of the assessee.

The assessee has now brought the issue in appeals before us on different grounds of appeal.

The learned counsel for the assessee, however, submitted that assessee has filed applications for admission of an additional ground in all the appeals, which reads as under: "Without prejudice to the grounds of appeal taken up in the original grounds of appeal, the learned CIT (Appeals) and the assessing officer erred in treating the appellant company as a'Foreign company'instead of a Domestic company.

The learned CIT (Appeals) and the assessing officer failed to correctly interpret the provisions of section 2(26) of the Act which defines 'Indian Company'. They failed to take cognizance of the fact that Sikkim was annexed to India some time in 1975 and, therefore, become a part and parcel of the Indian Territory. The learned CIT (Appeals) and the assessing officer failed to appreciate that by Notification No : SO 148(E), dated 23-2-1989 the Income Tax Act, 1961 was extended to the State of Sikkim with effect from 1-4-1989, i.e., assessment year 1989-90 and subsequently by section 26 of the Finance Act, 1989 the date was postponed to 1-4-1990, i.e., assessment year 1990-9 1.

Accordingly, all companies registered in the State of Sikkim were to be treated as 'Domestic company' effective from the assessment year 1990-91" Learned Counsel for the assessee in support of the additional ground of appeal submitted that assessee was a non-trading company and has income from dividend and interest etc. He has further submitted that the assessee has given donations to various specified institutions. He has further submitted that though the assessee has disclosed the status to be a foreign company in the returns of income, but in fact assessee is the domestic company and as such entitled for deductions under section 80GGA of the Income Tax Act. Learned Counsel for the assessee in support of his contention filed the opinion of Shri V.H. Patil, Advocate, Supreme Court. Learned Counsel for the assessee relied on the same, and submitted that assessee is a private limited company registered as a company limited by guarantee under the registration of Companies Act Sikkim, 1961 on 10- 10- 1984. The registered office of the company is situated in State of Sikkim, M.G. Marg, Gangtok. The law relating to incorporation of companies is called the Registration of Companies Act Sikkim, 1961 which came into force by notification under Sikkim Darbar Gazette, January 1962, part-V. He has submitted that the objects of the company which extend to the whole of India are to provide, relief to poor, education, medical relief and the advancement of say other objects of general public utility and other activities related thereto including research etc. As per clause 5(2) of the Memorandum of Association, there is a prohibition of distribution of dividend/ profits of the company to its members. He has further submitted that Sikkim became a component State of the Indian Union by and under the Constitution (36th Amendment) Act, 1975, which inserted article 371F in the Constitution. Clause (k) of that article provides that all laws in force immediately before the appointed day i.e., 26-4-1975 in the territory comprised in the State of Sikkim or any part thereof shall continue to be in force therein until amended or repealed by a competent Legislature or other competent authority. Learned Counsel for the assessee submitted that law relating to registration of companies under the Sikkim Act, 1961 has neither been repealed nor invalidated by the Legislature. He further submitted that operation of the Income Tax Act, 1961 was extended to the State of Sikkim by notification issued under article 371F with effect from assessment year 1990-91. He, therefore, submitted that has submitted that assessee is an Indian Company as provided under section 2(26)(1) of the I.T. Act.

He has further submitted that as per provisions of section 6 of the Income Tax Act, Indian Company is always a Resident and the charge of income-tax will be in accordance with such residential status. He has submitted that since Sikkim is now part of India and separate law was prevailing in respect of the registration of a company before Sikkim became part of the Indian Union and the assessee is registered under the Act of Sikkim, therefore the assessee-company formed and registered under the Sikkim laws relating to a company formerly in force in the State of Sikkim which is now part of India, therefore, the condition that the company is formed and registered under any law relating to a company formerly in force in any part of India is satisfied. He has further submitted that same law still continues to govern the companies registered in that part of India is not relevant. He has submitted that the only relevant consideration is whether the company was registered under the law prevailing in that territory before it became part of India. Learned Counsel for the assessee further submitted that the Indian Company is regarded as a Indian company if two conditions are fulfilled ie., first, if the company was formed and registered under Any law relating to companies which was or is in force in any part of India and secondly, if the registered office of the company is in India. Learned Counsel for the assessee ultimately submitted that since Sikkim is part of India and all the laws including Income Tax Act are made applicable to the State of Sikkim, the assessee became an Indian Company as defined under section 2(26)(1) of the Income Tax Act.

Learned Counsel for the assessee in support of the contention also filed copy of the notification under article 3 7 IF by which income-tax was made applicable to the State of Sikkim from 1-4-1989 i.e., assessment year 1989-90 and subsequent by section 26 of the Finance Act, 1989 the date was postponed to 1-4-1990 i.e., assessment year 1990-91 learned Counsel for the assessee relied upon judgment of Kerala High Court in the matter of CIT v. A.P. Parukutty Moopilamma (1984) 149 ITR 131(Ker) and order of ITAT Delhi Bench 'D' in the case of Pasupati Nath Commercial (P.) Ltd. v. CIT(2002) 121 Taxman 33 (Mag.) and submitted that the status of the company to be determined each assessment year and description of the status by assessee himself is not conclusive. Learned Counsel for the assessee submitted that merely assessee has disclosed its status to be foreign company in the returns of income is not enough to conclude that assessee is a foreign company as is held in earlier assessment years. Learned Counsel for the assessee submitted that in earlier year ITAT Delhi Bench rejected the contention of the assessee vide order dated 25-4-2003 with regard to the determination of the tax liability retrospectively on higher rate of tax but the point with regard to determination of status was not decided as this point is agitated before the Tribunal for the first time. Learned counsel for the assessee further submitted that section 115A(4) is applicable from 1-4-1995, therefore, finding of the authority below are not correct. He has further submitted that tax rate cannot be made applicable retrospectively. Learned Counsel for the assessee further submitted that it was imperative for the authorities below to determine the correct status of the assessee in each assessment year and since Sikkim is a part of India where assessee was registered as company and Income Tax Act is applicable to the State of Sikkim, the assessee is an Indian Company within the meaning of section 2(26)(i) of the Income Tax Act. Therefore, assessee is entitled for deduction under section 88GGA of the Income Tax Act. Learned counsel for the assessee submitted that since this point is taken for the first time and all the facts are available on record, this point being legal in nature may be admitted for hearing. He has relied on the decision of Hon. Supreme Court in the case of National Thermal Power Co. Ltd. v.CIT (1998) 229 ITR 383 (SC). Learned Counsel for the assessee submitted that the additional ground need no investigation of the facts and as such the same may be admitted for the purpose of disposal of the appeals. Learned Counsel for the assessee further submitted that he has no objection if the matter may be restored to the file of Commissioner (Appeals) for adjudication on additional ground of appeal.

On the other hand, learned DR relied upon the order of the authorities below and submitted that additional ground is taken for the first time which was not taken before the authorities below. Therefore, this issue was not adjudicated by the Commissioner (Appeals) and was also not examined by the assessing officer. Therefore, the additional ground requires examination of the facts. Accordingly, he opposed the admission of additional ground. Learned DR, however, admitted Sikkim is a part of India and Income Tax Act is applicable to the State of Sikkim.

We have considered rival submissions of learned representatives of both the parties for the purpose of disposal of applications for admission of additional ground mentioned above and merits thereof. Before dealing with this issue, we would like to mention that Commissioner (Appeals) mentioned in the impugned order that in assessment years 1992-93 and 1995-96 assessment orders under section 143(3) are under challenge.

Commissioner (Appeals) also mentioned that in assessment years 1993-94 and 1994-95 the intimation under section 143(i)(a) was in dispute before him. However, considering the above submission and material on record, we are of the view that the position is not so as in assessment year 1993-94 the orders under section 143(3) was challenged before Commissioner (Appeals). Only for the assessment year 1994-95 the intimation under section 143(1)(a) was in challenge. Similarly, we find that Commissioner (Appeals) has mentioned in para 3 of the impugned order that in the return of income the status of the assessee has been shown as domestic company. However, learned counsel for the assessee has very fairly admitted before us that in fact assessee had shown the status in the return of income to be a foreign company but according to him this fact is not correct as the Sikkim is part of India and Income Tax Act is applicable and, therefore, assessee is domestic company as provided under Income Tax Act. Therefore, we first take up the matter for the assessment years 1992-93, 1993-94 and 1995-96 for the purpose of admission of the additional ground as mentioned above. The Hon.

Supreme Court in the matter of National Thermal Power Co. Ltd. (supra) held: "Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that questioning order to correctly assess the tax liability of an assessee." On considering of the above facts it is clear that authorities below should have determined the status of the assessee in each year for the purpose of determining the tax liability of the assessee. Merely because the assessee has shown the status to be of foreign company is not enough to conclude that assessee is a foreign company. Similarly, merely because in earlier years the assessee has shown its status to be a foreign company is not enough to hold that assessee is a foreign company. The registered address of the assessee is available with the assessing officer, It is clear from the above facts that Sikkim is a part of India. Therefore, Income Tax Act is applicable to the State of Sikkim as per the notification referred to by the learned counsel for the assessee. Even this fact is not disputed before us by learned DR.Therefore, all the facts are available with the authorities below to verify the status of the assessee-company. Since the deduction under section 80GGA is clearly dependent on the findings given on the point of status. Now if it is treated as foreign company apparently the deduction under section 8OGGA would not be available. But if it is an Indian Company the assessee would be entitled to the same. Therefore, determination of correct residential status of the company is very crucial and goes to the very root of the issues involved in the appeals. The point in issue as raised in the additional ground is clearly legal in nature and requires no investigation of fact and the same would also decide the correct tax liability of the assessee.

Considering the above facts and decision of Hon. Supreme Court in National Thermal Power Co. Ltd. case (supra) we are of the view that in the interest of the justice the additional ground so raised deserves admission after all appeal proceedings are continuation of assessment proceedings and aims at determining the correct income and tax liability of the assessee. We accordingly admit the above additional ground in all the assessment years i.e., 1992-93, 1993-94, 1995-96.

However, equally we are of the view since the point is raised for the first time before the Tribunal, therefore, proper opportunities should also be given to the authorities below. Therefore, instead of deciding the additional ground by the Tribunal, we restore additional ground in all the above-mentioned assessment years to the file of Commissioner (Appeals) with direction to decide the same as per law after allowing reasonable opportunity of being heard to the assessee as well as assessing officer. The remaining ground of appeal are entirely dependent upon findings given on this issue as to whether the assessee is an Indian company under the provisions of section 2(26) of the Income Tax Act, Therefore, we feel that the other grounds should also be restored to the file of Commissioner (Appeals) with direction to re-decide these grounds on merits for deduction under section 80GGA after determining whether the assessee was an Indian company or a foreign company, We accordingly set aside the orders of Commissioner (Appeals) and restore all these appeals to his file for de novo orders both on additional ground on merits and remaining issues raised in appeals before us after allowing a reasonable and sufficient opportunity of being heard to the assessee as well as assessing officer. As a result the appeals of the assessee in ITA Nos. 451, 452 and 454 of 1999 for assessment years 1992-93,1993-94 and 1995-96 are allowed for statistical purpose.

Now we take up ITA No. 453 of 1999 for assessment year 1994-95. In this year admittedly the assessee has shown status in the return of income to be a foreign company. The assessing officer on the basis of information contained in the return of income processed the return under section 143 (1)(a) and did not allow deduction to the assessee under section 80GGA of the Income Tax Act treating it to be a foreign company, as the deduction was not available because of applicability of provisions contained in section 11 5A of the Income Tax Act. Section 143(1)(a) as was applicable to the year under appeal read as under:- "(1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum sopayable,and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, in prima facie admissible but which is not claimed in the return, shall be allowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, in prima facie inadmissible, shall be disallowed: Provided further that an intimation shall be sent to the assessee whether or not any adjustment has been made under the first proviso and notwithstanding that no tax or interest is due from him : Provided also that an intimation under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable." The above provision clearly shows that assessing officer could make prima facie adjustments to the income or loss declared in the return on the basis of information available in such returns, accounts or documents which is prima facie admissible but which is not claimed in the return, shall be allowed. Therefore, it was necessary for the assessee to give complete information in the return of income and if the facts are clear than the assessing officer could make prima facie adjustment to allow the necessary relief even though not claimed in the return. Admittedly in this case assessee has shown the status to be of foreign company. Therefore, at the time of processing the return assessing officer was bound to take the status as a foreign company as declared in the returns and, therefore, rightly did not allow deduction under section 80GGA because of applicability of provision of section 115A of the Income Tax Act. As per provisions of section 143(1)(a), and information available on record at the time of processing the return under section 143(1)(a), the assessing officer could have not suo motu changed the status to a domestic company such course of action does not fall within the purview of prima facie adjustments mentioned under section 143(1)(a). We, therefore, do not find any merits in the submission of assessee with regard to admission of the additional ground in the assessment year 1994-95. The application for admission of additional ground in the assessment year 1994-95 is accordingly dismissed. Different grounds are taken in the grounds of appeal on merits in the assessment year 1994-95. No specific submission is made before us challenging the orders of the authorities below. It is only stated that section 115A(4) is applicable with effect from 1-4-1995, therefore, the same was applicable for and from assessment year 1995-96. It was further submitted in the ground that the said amendment having prospective effect cannot be applied to the earlier assessment years and as such the assessee-company was eligible for the deduction under section 80GGA of the Act for assessment year 1994-95 under appeal. It was merely submitted that the appeal of the assessee was pending for assessment year 1991-92 before ITAT. However, the assessing officer disallowed the deduction under section 80GGA as was confirmed by Commissioner (Appeals) for early years. The appeal for assessee for assessment year 1991-92 was dismissed by ITAT Delhi Bench 'B' by order dated 25-4-2003. Section 115A of the Income Tax Act relates to income of foreign company and provides the amount of income-tax calculated at fixed rate. It did not provide for deduction under Chapter VI-A. The assessee offered income for tax purposes at the rate of 25% in computation of income filed with the return of income. The relevant provision of law inserted by amendment from 1-4-1995 under section 115A could be referred to in order to get clarification and intention of the Legislature in introducing such provision in the law. The assessee could have filed revised return under section 139(5) of the Income Tax Act if discover any omission or wrong statement in the return of income in prescribed time but assessee failed to do so and on the basis of earlier years orders filed return of income in the status of foreign company. The assessing officer on such information available in the return of income, accounts and documents processed the return of income in accordance with the provision of section 115A of the Income Tax Act.

In our view the assessing officer rightly disallowed the claim of assessee for deduction under section 80GGA as it was prima facie inadmissible in law in the facts and circumstances of the case and on the basis of material available on the record while processing the return under section 143(1)(a). We therefore, do not find any irregularity or illegality in the orders of the authorities below in taking such view against the assessee. We, therefore, in this view of the matter and considering the fact that return was processed under section 143(1)(a) on the basis of information contained in the return of income, we do not find any justification to interfere in the orders of the authorities below in the assessment year 1994-95. This appeal of the assessee is dismissed.

As a result, appeals of the assessee for assessment years 1992-93, 1993-94 and 1995-96 are allowed for statistical purpose and appeal for assessment year 1994-95 is dismissed.