The Department raised a completely new ground before the Tribunal to support the assessment, and the Tribunal allowed it and remanded. Was the Tribunal entitled to do that?
Yes. The Supreme Court held that the Tribunal's power under section 33(4) of the 1922 Act to pass such orders as it thinks fit is expressed in the widest possible terms. The word 'thereon' confines it to the subject matter of the appeal, but within that subject matter the Tribunal may allow a ground to be raised for the first time and may direct a further enquiry. The subject matter here was the written down value of the assessee's buildings and machinery, and it was open to the Department to support the finding on that on any ground decided against it. The Appellate Tribunal Rules are procedural and do not cut down the section.
Decided by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and Vishishtha Bhargava, JJ (judgment delivered by Ramaswami, J)) on 1966-09-22, reported as 1967 AIR 455; 1967 SCR (1) 463. It bears on section 33(4) of the Indian Income-tax Act, 1922, section 10(5)(b) of the Indian Income-tax Act, 1922, section 254(1), section 43(6) of the Income Tax Act 1961, in Appeals matters.
This is the standard authority on the width of the Tribunal's appellate power and on its limit. The two halves matter equally. The width: the words 'pass such orders as it thinks fit' carry all the powers of the first appellate authority except, possibly, enhancement, including the power to direct a further enquiry and dispose of the case on it; and the Rules, being procedural, neither exhaust nor control that power. The limit: 'thereon' ties the Tribunal to the subject matter of the appeal, which is the line every argument about new grounds is fought on. It is also the case for the respondent who has not appealed - he may support the order below on any ground decided against him.
Binding on every court and authority in India.
Read aloud by your device. Press again to stop.
The assessee was a public company incorporated in the former Indore State, owning a textile mill there. Until 1949-50 it was assessed in British India as a non-resident, except in 1948-49, on income falling within the extra-territorial provisions. After the Constitution, Indore became a Part B State, the Act was extended there from 1 April 1950, and the company became assessable as a resident from 1950-51. In the assessments for 1950-51 to 1952-53 a question arose as to the written down value of its buildings and machinery for depreciation. The company said that since no depreciation had ever actually been allowed to it under the Act, original cost should be taken, without regard to the years the machinery had worked or the written down value in its books. The Department said that depreciation had been allowed in arriving at total income for the purpose of computing the proportionate income taxable as a non-resident, and had therefore been actually allowed. The Income-tax Officer and the Appellate Assistant Commissioner rejected the company's contention; the Tribunal held that only the depreciation which entered into the computation of the taxable income could be treated as actually allowed. Before the Tribunal the Department raised, for the first time, paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, under which depreciation actually allowed under a Part B State's income-tax or business profits laws must be taken into account; it said depreciation allowed under the Indore Industrial Tax Rules had to be deducted. The Tribunal allowed the point and remanded to the Income-tax Officer to find whether any depreciation had been allowed under those Rules and whether the Rules related to income-tax, super-tax or tax on business profits. The Bombay High Court answered the first referred question for the assessee and answered the second by holding paragraph 2 valid but applicable only if the remanded questions were decided for the Department. Both sides appealed by certificate.
All five appeals were dismissed, with no order as to costs in either set. On the assessee's appeals, the Tribunal had jurisdiction to permit the new contention and to remand as it did. Section 33(4) expresses the Tribunal's powers in the widest possible terms; the word 'thereon' restricts its jurisdiction to the subject matter of the appeal, but the words 'pass such orders as the Tribunal thinks fit' include all the powers, except possibly enhancement, conferred on the Appellate Assistant Commissioner by section 31, so the Tribunal may direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on it. The subject matter here was the proper written down value for depreciation, and under rule 27 it was open to the Department, as respondent, to support the Appellate Assistant Commissioner's finding on that on any ground decided against it. Even assuming rules 12 and 28 were not strictly applicable to a remand of this kind, the Tribunal had sufficient power under section 33(4); the rules are merely procedural, are not exhaustive of the Tribunal's powers, and do not circumscribe or control the section. On the Commissioner's appeals, the question was governed by the Court's decision in Nandlal Bhandari Mills and the High Court's answer was correct.
The Court read section 33(4) as a grant of appellate power with one textual limitation and no other. 'Thereon' fixes the field: the Tribunal may deal with the subject matter of the appeal and nothing else. Within that field the phrase 'such orders as it thinks fit' is as wide as language allows, and the Court measured its content by reference to the powers of the first appellate authority under section 31, holding it to include everything except, possibly, the power of enhancement, and in particular the power to direct a further enquiry and to dispose of the case on the footing of that enquiry. Applying that, the appeal was about the written down value, and the Department's new point went to the same question, so it fell inside the subject matter; rule 27 in any event allows a respondent to support the order below on grounds decided against him. The argument that the remand did not fit the language of rules 12 and 28 was met by holding that the rules, made under the rule-making power, are procedural in character; they neither exhaust the Tribunal's powers nor control the statutory grant. The Court also recorded that no objection to the new ground had been taken before the Tribunal or the High Court, and proceeded only on an assumption in the assessee's favour that the point was implicit in the question referred.
The word 'thereon', of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppYes. The Supreme Court held that the Tribunal's power under section 33(4) of the 1922 Act to pass such orders as it thinks fit is expressed in the widest possible terms. The word 'thereon' confines it to the subject matter of the appeal, but within that subject matter the Tribunal may allow a ground to be raised for the first time and may direct a further enquiry. The subject matter here was the written down value of the assessee's buildings and machinery, and it was open to the Department to support the finding on that on any ground decided against it. The Appellate Tribunal Rules are procedural and do not cut down the section. This was decided by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and Vishishtha Bhargava, JJ (judgment delivered by Ramaswami, J)) and bears on section 33(4) of the Indian Income-tax Act, 1922, section 10(5)(b) of the Indian Income-tax Act, 1922, section 254(1), section 43(6) of the Income Tax Act 1961. It is reported as 1967 AIR 455; 1967 SCR (1) 463. This is the standard authority on the width of the Tribunal's appellate power and on its limit. The two halves matter equally. The width: the words 'pass such orders as it thinks fit' carry all the powers of the first appellate authority except, possibly, enhancement, including the power to direct a further enquiry and dispose of the case on it; and the Rules, being procedural, neither exhaust nor control that power. The limit: 'thereon' ties the Tribunal to the subject matter of the appeal, which is the line every argument about new grounds is fought on. It is also the case for the respondent who has not appealed - he may support the order below on any ground decided against him. If it applies to you, the first step is this: Define the subject matter of the appeal first; a new ground within it is open, and a ground outside it is not, whichever side is raising it.
The assessee was a public company incorporated in the former Indore State, owning a textile mill there. Until 1949-50 it was assessed in British India as a non-resident, except in 1948-49, on income falling within the extra-territorial provisions. After the Constitution, Indore became a Part B State, the Act was extended there from 1 April 1950, and the company became assessable as a resident from 1950-51. In the assessments for 1950-51 to 1952-53 a question arose as to the written down value of its buildings and machinery for depreciation. The company said that since no depreciation had ever actually been allowed to it under the Act, original cost should be taken, without regard to the years the machinery had worked or the written down value in its books. The Department said that depreciation had been allowed in arriving at total income for the purpose of computing the proportionate income taxable as a non-resident, and had therefore been actually allowed. The Income-tax Officer and the Appellate Assistant Commissioner rejected the company's contention; the Tribunal held that only the depreciation which entered into the computation of the taxable income could be treated as actually allowed. Before the Tribunal the Department raised, for the first time, paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, under which depreciation actually allowed under a Part B State's income-tax or business profits laws must be taken into account; it said depreciation allowed under the Indore Industrial Tax Rules had to be deducted. The Tribunal allowed the point and remanded to the Income-tax Officer to find whether any depreciation had been allowed under those Rules and whether the Rules related to income-tax, super-tax or tax on business profits. The Bombay High Court answered the first referred question for the assessee and answered the second by holding paragraph 2 valid but applicable only if the remanded questions were decided for the Department. Both sides appealed by certificate. The matter was decided on 1966-09-22 by the Supreme Court (Supreme Court of India - J.C. Shah, V. Ramaswami and Vishishtha Bhargava, JJ (judgment delivered by Ramaswami, J)). On those facts the Supreme Court held as follows. All five appeals were dismissed, with no order as to costs in either set. On the assessee's appeals, the Tribunal had jurisdiction to permit the new contention and to remand as it did. Section 33(4) expresses the Tribunal's powers in the widest possible terms; the word 'thereon' restricts its jurisdiction to the subject matter of the appeal, but the words 'pass such orders as the Tribunal thinks fit' include all the powers, except possibly enhancement, conferred on the Appellate Assistant Commissioner by section 31, so the Tribunal may direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on it. The subject matter here was the proper written down value for depreciation, and under rule 27 it was open to the Department, as respondent, to support the Appellate Assistant Commissioner's finding on that on any ground decided against it. Even assuming rules 12 and 28 were not strictly applicable to a remand of this kind, the Tribunal had sufficient power under section 33(4); the rules are merely procedural, are not exhaustive of the Tribunal's powers, and do not circumscribe or control the section. On the Commissioner's appeals, the question was governed by the Court's decision in Nandlal Bhandari Mills and the High Court's answer was correct.
The Court read section 33(4) as a grant of appellate power with one textual limitation and no other. 'Thereon' fixes the field: the Tribunal may deal with the subject matter of the appeal and nothing else. Within that field the phrase 'such orders as it thinks fit' is as wide as language allows, and the Court measured its content by reference to the powers of the first appellate authority under section 31, holding it to include everything except, possibly, the power of enhancement, and in particular the power to direct a further enquiry and to dispose of the case on the footing of that enquiry. Applying that, the appeal was about the written down value, and the Department's new point went to the same question, so it fell inside the subject matter; rule 27 in any event allows a respondent to support the order below on grounds decided against him. The argument that the remand did not fit the language of rules 12 and 28 was met by holding that the rules, made under the rule-making power, are procedural in character; they neither exhaust the Tribunal's powers nor control the statutory grant. The Court also recorded that no objection to the new ground had been taken before the Tribunal or the High Court, and proceeded only on an assumption in the assessee's favour that the point was implicit in the question referred. In the words reproduced by the source cited on this page: "The word 'thereon', of course, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal."
It was decided by the Supreme Court on 1966-09-22 and is reported as 1967 AIR 455; 1967 SCR (1) 463. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 33(4) of the Indian Income-tax Act, 1922, section 10(5)(b) of the Indian Income-tax Act, 1922, section 254(1), section 43(6), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. All five appeals were dismissed, with no order as to costs in either set. On the assessee's appeals, the Tribunal had jurisdiction to permit the new contention and to remand as it did. Section 33(4) expresses the Tribunal's powers in the widest possible terms; the word 'thereon' restricts its jurisdiction to the subject matter of the appeal, but the words 'pass such orders as the Tribunal thinks fit' include all the powers, except possibly enhancement, conferred on the Appellate Assistant Commissioner by section 31, so the Tribunal may direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on it. The subject matter here was the proper written down value for depreciation, and under rule 27 it was open to the Department, as respondent, to support the Appellate Assistant Commissioner's finding on that on any ground decided against it. Even assuming rules 12 and 28 were not strictly applicable to a remand of this kind, the Tribunal had sufficient power under section 33(4); the rules are merely procedural, are not exhaustive of the Tribunal's powers, and do not circumscribe or control the section. On the Commissioner's appeals, the question was governed by the Court's decision in Nandlal Bhandari Mills and the High Court's answer was correct. It arises in Appeals matters, on section 33(4) of the Indian Income-tax Act, 1922, section 10(5)(b) of the Indian Income-tax Act, 1922, section 254(1), section 43(6) of the Income Tax Act 1961, and was decided by Supreme Court of India - J.C. Shah, V. Ramaswami and Vishishtha Bhargava, JJ (judgment delivered by Ramaswami, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. As respondent, remember you may support the order under appeal on grounds decided against you without having filed a cross appeal or objection. Do not rest an objection on the Tribunal's rules alone; they are procedural and the Court held they neither exhaust nor circumscribe the statutory power. Take the objection at the time - the Court noted that no objection to the new ground had been raised before the Tribunal or the High Court, and only assumed in the assessee's favour that the point was implicit in the referred question.
Still good law. The standard authority on the width and limits of the Tribunal's appellate power; the harvested page records it as followed in a 1969 Supreme Court decision and relied on in 1980, and as cited in more than two hundred decisions. No later decision doubting it was read as part of this exercise. Section 254(1) of the 1961 Act is in similar terms but was not before the Court, and the Tribunal now works under its own rules. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Decided under the Indian Income-tax Act, 1922 on section 33(4), with the depreciation questions arising under sections 10(2)(vi) and 10(5)(b) and the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950; the batch line's sections 254 and 254(1) of the 1961 Act correspond to the appellate power but were not construed. The Court left the power of enhancement expressly open, saying only 'except possibly'. It did not decide whether depreciation had in fact been allowed under the Industrial Tax Rules or whether those Rules answered the description in paragraph 2 - both were remanded and remain undecided here. The substantive question in the Commissioner's appeals was disposed of by reference to Nandlal Bhandari Mills, which was not read as part of this exercise, so the reasoning on 'depreciation actually allowed' is not recorded in this judgment. The harvested text gives the date of the High Court's judgment both as 22 June 1962 and as 22 September 1962; the former appears in the cause title and has been preferred. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All five appeals were dismissed, with no order as to costs in either set. On the assessee's appeals, the Tribunal had jurisdiction to permit the new contention and to remand as it did. Section 33(4) expresses the Tribunal's powers in the widest possible terms; the word 'thereon' restricts its jurisdiction to the subject matter of the appeal, but the words 'pass such orders as the Tribunal thinks fit' include all the powers, except possibly enhancement, conferred on the Appellate Assistant Commissioner by section 31, so the Tribunal may direct the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on it. The subject matter here was the proper written down value for depreciation, and under rule 27 it was open to the Department, as respondent, to support the Appellate Assistant Commissioner's finding on that on any ground decided against it. Even assuming rules 12 and 28 were not strictly applicable to a remand of this kind, the Tribunal had sufficient power under section 33(4); the rules are merely procedural, are not exhaustive of the Tribunal's powers, and do not circumscribe or control the section. On the Commissioner's appeals, the question was governed by the Court's decision in Nandlal Bhandari Mills and the High Court's answer was correct.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
One machine in my block of assets was not used this year. Can the AO deny depreciation on it?
My ITAT stay has crossed 365 days and the appeal is still not decided. Can the Tribunal extend it?
My appeal is pending before the Tribunal and recovery of the demand is going on. Can the Tribunal stay recovery when no section gives it that power?
The Tribunal has recalled its whole order on a rectification application. Does section 254(2) give it that power, or can it only amend the order?