TECHNOFORCE SOLUTIONS (I) PRIVATE LIMITED,NASHIK vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, NASHIK, NASHIK

ORDER

PER INTURI RAMA RAO, AM:

It is prayed that the Honorable Tribunal be pleased to admit the aforesaid claim and adjudicate on its deductibility on the merits of the case or, in the alternative, direct the lower authorities to admit the said claim and adjudicate on its deductibility on the merits of the case. The appellant craves leave to add to, alter, delete or substitute all or any of the aforesaid ground of appeal

.”

3. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing of engineering goods. The Return of Income for the assessment year 2015-16 was filed on 19.11.2015 declaring total income of Rs.2,33,13,780/- and the same was revised on 24.05.2016 at a total income of Rs.5,45,59,680/-. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Circle-1, Nashik (‘the Assessing Officer’) vide order dated 27.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) accepting the returned income. However, while doing so, the Assessing Officer rejected the claim made during the course of assessment proceedings vide letter dated 31.10.2018 for deduction of service tax of Rs.40,82,852/- without assigning reasons whatsoever.

4. Being aggrieved by the above action of the Assessing Officer, an appeal was filed before the NFAC, who vide impugned order had Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT, 284 ITR 323 (SC) and also the decision of the Hon’ble Bombay High Court in the case of Ultratech Cement Ltd. vs. Addl. CIT (ITA No.1040 of 2014) and proceeded to hold that in the absence of claim made in the return of income or by filing revised return of income, the additional claim made during the course of assessment proceedings cannot be entertained.

5. Being aggrieved, the appellant is in appeal before us in the present appeal.

6. The ld. Counsel submits that the NFAC had fell in serious error in not entertaining the additional claim made during the course of assessment proceedings placing reliance on the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) since the said decision was distinguished by several High Courts including the Hon’ble Bombay High Court in the case of CIT vs. Pruthvi Brokers & Shareholders, 349 ITR 336 (Bom.), there is no bar on the part of the appellate authority to entertain the additional claim in the absence of any statutory provisions.

7. On the other hand, ld. Sr. DR has no serious objection to remit the matter back to the file of the NFAC.

8. We heard the rival submissions and perused the material on record. The issue that came up for consideration is whether or not there is bar to entertain the additional claim made by the assessee during the course of assessment proceedings. The said issue stands covered by the decision of the Co-ordinate Bench of this Tribunal in the case of DCIT vs. M/s. Bilcare Limited vide dated 31.05.2023, wherein, this Tribunal was held as under :- “73. Then, the issue that comes up for consideration before us is whether the fact that the assessee company itself had reduced the WDV of the assets from the opening WDV of block of assets in the return of income, can be a bar to claim the higher depreciation during the course of assessment proceedings. Admittedly, in the present case, under wrong notion, the assessee company had reduced the WDV of the assets leased to BSPL from the opening value of the block of assets under which it falls. However, during the course of assessment proceedings, it sought to rectify this mistake by claiming the higher depreciation without such reduction. The CBDT vide Circular No.14/1995 had clarified that while computing the taxable income of an assessee should be computed in accordance with the provisions of law, even a fresh claim made during the course of assessment proceedings in the absence of any statutory bar should be considered by the Assessing Officer. The Hon‟ble High Court of Gujarat in CIT vs. Mitesh Impex 367 ITR 85 held that the income tax proceedings cannot be treated as adverse proceedings and income should be computed in accordance with the provisions of law and further held that the decision of Hon‟ble Supreme Court in the case of Goetze (India) Ltd. (supra) does not put any fetters on the powers of Appellate authorities in entertaining a new claim. The relevant paragraphs of the decision are extracted below: “33. In case of Goetze (India) Ltd. (supra) the Supreme Court distinguished the judgment in the case of National Thermal Power Co. Ltd. (supra) on the ground that the same pertained to the power of the Tribunal under section 254 of the Act to entertain a point of law for the first time and commented that such decision does not relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the process the Supreme Court recognized that a new claim could not be entertained by the assessing officer without the assessee revising the return. While doing so it was clarified that:— "4. . . However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income-tax Act, 1961. There shall be no order as to costs."

34. In the case of CIT v. Jai Parabolic Springs Ltd. [2008] 306 ITR 42/172 Taxman 258 (Delhi), the Delhi High Court held that there is no prohibition on the powers of the Tribunal to entertain an additional ground which according to the Tribunal arose in the matter and for just decision of the case.

35. In case of CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336/208 Taxman 498/23 taxmann.com 23 (Bom.) the Bombay High Court considered the issue at considerable length and held that Commissioner (Appeals) as well as the Tribunal have the jurisdiction to consider the additional claim and not merely additional legal submissions. The appellate authorities have discretion to permit such additional claims. Such claims need not be those which became available on account of change of circumstances of law but which were even available when the return was filed.

36. The Delhi High Court once again in recent judgment in the case of CIT v. Sam Global Securities Ltd. [2014] 360 ITR 682/[2013] 38 taxmann.com 129 observed that the Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. In that sense assessment proceedings are not adversarial in nature. With these observations Court confirmed the view of the Tribunal reversing the decision of the assessing officer rejecting the claim of the assessee on the ground that no revised return was filed.

37. In case of CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj.), Full Bench of this Court held that merely because a ground has not been raised though it could have been raised in support of the relief sought in the appeal, it cannot be said that such ground cannot be raised before the Tribunal. Such ground can be raised provided it falls within the contours of the subject matter of the appeal.

38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd.(supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd.(supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the assessing officer. Income-taxproceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to tax real income.”

filed by the Revenue, hence dismissed.

9. In view of the above settled position of law, we are of the considered opinion that the NFAC had fell in serious error in not directing the Assessing Officer to examine the additional claim made during the course of assessment proceedings. Accordingly, the orders of the lower authorities are set-aside and we direct the Assessing Officer to examine the allowability of claim for deduction of service tax having regard to the evidence on record.