Decided on October 28,1994



R.V. Easwar, Judicial Member - (1.) IN this appeal by the revenue the only ground is as under : That on the facts and in the circumstances of the case and having regard to the provisions of Section 155(7A) read with Section 292B of the INcome-tax Act, the Learned Commissioner of INcome Tax (Appeals) erred in deleting the addition of Rs. 42,79,012 by the Assessing Officer towards capital gains while passing order under Section 254 of the INcome-tax Act.
(2.) In the original assessment completed under Section 143(3) on 23-12-1980 the additional compensation of Rs. 42,79,012 received by the assessee in respect of the land compulsorily acquired by the Government under the Land Acquisition Act, 1976 was not brought to assessment under the head 'Capital Gains' because the additional compensation itself was received only in the year 1983. It appears that there were appeals on certain other points which were ultimately decided by the Tribunal by order dated 24-3-1983. This order was recalled by the Tribunal on the assessee's application. Thereafter the Tribunal passed an order on 10-2-1986. It was a common order for the assessment years 1975-76 to 1977-78. In respect of the assessment year 1977-78 with which we are presently concerned, the dispute was with regard to the applicability of Section 74A of the Act and the .allowability of certain expenses under the said provision. After hearing the rival contentions, the Tribunal came to the following conclusion : 12. Having regard to the entire circumstances of the case, we are of the opinion that certain facts are to be brought out correctly on record, particularly when the ITO has not dealt with various points of contention raised by the assessee that Section 74A was not applicable. The CIT (Appeals) to some extent has dealt with this point, as far as the legal implication is concerned. But the factual aspect of the matter has not been dealt with properly. The ITO would also see the constitution or Articles of Association in order to ascertain what were the objects and purpose of the club and what were the activities which were authorised to be carried on by the assessee, particularly when the assessee has been contending all along that all the activities of the assessee constitute a business and some lease land was taken for carrying on such activities by the assessee. It is also necessary to ascertain whether the horses or some of them, if any, were held as stock-in-trade, vis-a-vis, the Balance Sheet for the year in which the horses have been shown in Schedule 'A' of the fixed assets. Basic and relevant facts are necessary to be brought out on this point also. Accordingly we deem fit to set aside the orders of the authorities below in respect of this dispute before us and to restore the matter to the file of the ITO for fresh disposal after bringing all the relevant facts and basic materials on record and after giving the assessee adequate opportunity of being heard. The assessee is at liberty to place any material evidence before the ITO before the case is disposed of afresh as indicated above. We, therefore, set aside the orders of the authorities below for the above purpose. On 18-5-1987 the Assessing Officer passed an order under Section 143(3) read with Section 254. In this order the amount of Rs. 42,79,012 was brought to assessment with the narration "further compensation received during 1983". Against the assessment the assessee filed an appeal to the CIT (Appeals). The CIT (Appeals) held that the Assessing Officer was under the erroneous impression that the entire assessment was open and has proceeded to tax the additional compensation on that footing. According to the CIT (Appeals) the Tribunal set aside the assessment only for the limited purpose of examining the applicability of Section 74A with reference to the facts and that order did not give authority to the Assessing Officer to bring to tax the additional compensation. He, therefore, held that the Assessing Officer cannot bring to tax the additional compensation by the order dated 18-5-1987 passed under Section 254 read with Section 143(3). He further noticed that the entire additional compensation was invested by the assessee in specified assets, i.e., units of Unit Trust of India (Capital Gains Unit Scheme, 1983)in 1983 itself and was, therefore, exempt from capital gains tax. In this view of the matter he deleted the addition of the additional compensation.
(3.) THE revenue is in appeal against the order of the CIT (Appeals). It is contended that the additional compensation is at any rate assessable under Section 155(7A) of the Act read with Section 292B thereof. What the revenue says is that even if it is accepted that the Assessing Officer cannot include the additional compensation in the order dated 18-5-1987 which was passed to give effect to the Tribunal's order, the power to assess the additional compensation must be held referable to Section 155(7A) and should be upheld on that basis. It is further stated that the inclusion of the amount of additional compensation in the order dated 18-5-1987 must be taken as a mere irregularity or a curable defect in view of Section 292B. It is riot possible to accept the contention. Firstly, the CIT (Appeals) is right in his view that the amount of additional compensation cannot be brought to tax in the order passed to give effect to the Tribunal's order since the Tribunal's order gave the Income-tax Officer authority only to examine the applicability of Section 74A with reference to certain facts. THE Tribunal did not set at large the entire assessment with unlimited powers to the Assessing Officer. THE order of the Tribunal cannot be so understood. It should be understood in the background of the dispute before it which only pertained to Section 74A. THE scope of the Tribunal's order cannot be enlarged merely by pointing out to the words used in the operative portion of its order divorced from the context in which the assessment was set aside. THE principles laid down by the Calcutta High Court in the case of Surrendra Overseas Ltd. v. CIT [1979] 120 ITR 872 do not authorise the action of the Assessing Officer and exposed the incorrect appreciation of the scope and tenor of the Tribunal's order. We, therefore, agree with the CIT (Appeals) that the inclusion of the additional compensation in the order dated 18-5-1987 was wholly without authority.;

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