- (1.) The assessee has moved these stay petitions, under rule 35A of the Appellate Tribunal Rules, 1963, to seek stay on collection/recovery of income-tax demand of Rs. 10,24,699 and Rs. 94,75,718, created by order under section 154 read with section 143(1)(a) and under section 143(3) read with section 148, respectively, for the assessment year 1993-94. The aforesaid demands were created on account of assessing officers recomputation of allowable deduction under section 80HHC. On assessees appeal against this recomputation, the Commissioner (Appeals), instead of giving any relief to the assessee and instead of even examining merits of the recomputation, declined the claim for deduction under section 80HHC per se on the ground that chartered accountants certificate on Form No. 10CCAC was an invalid certificate. The admitted defect in the chartered accountants certificate was that Annexure A to the aforesaid certificate was on a performa which ceased to be effective from 1-4-1992, onwards, though a revised certificate has since been filed before the lower authorities. The learned Commissioner (Appeals) declined to admit the revised certificate and directed the assessing officer to take deduction under section 80HHC at nil. In effect, the Commissioner (Appeals) directed enhancement of assessed income. With these compounded grievances, the assessee had filed appeals before this Tribunal and has also preferred the present stay petitions.
(2.) Learned counsel for the assessee, with a view to demonstrate that he has a strong prima facie case in appeal, submitted that the assessing officers recomputation of allowable deduction under section 80HHC is wholly erroneous. It was submitted that the chartered accountants certificate in support of deduction under section 80HHC as filed along with the income-tax return, showed the allowable deduction at Rs. 3,09,84,137 which was worked out as per the old formula which admittedly ceased to be effective from 1-4-1992. However, as per the scheme of amendments effective from 1-4-1992, the allowable deduction works out to even higher an amount i.e., at Rs. 4,55,79,721 but the assessing officer has recomputed the allowable deduction at Rs. 2,42,96,210. It was further submitted that the difference between these two figures is explained mainly by following errors committed by the assessing officer : (a) assessing officer did not exclude Rs. 84,55,318 from direct costs being freight and insurance though this figure was excluded from export turnover ., (b) the assessing officer did not exclude Rs. 11,15,431 from direct costs though this amount was admittedly on account of loss by silk fabrics destroyed in the fire; and (c) the assessing officer did not make adjustment in indirect costs for 10 per cent of other income (such as interest income of Rs. 368 lakhs and export entitlements of Rs. 298 lakhs) which works out to Rs. 66,67,316 and which was required to be excluded from indirect costs in terms of para 32.11 of the Central Board of Direct Taxes Circular No. 530. The learned counsel filed detailed statement to demonstrate that on making these adjustments which were claimed to be mandatory as per provisions of the Income Tax Act, the section 80HHC claim will in fact go up to Rs. 4,55,79,921 as against that of Rs. 3,09,84,137 originally claimed by the assessee, and as against Rs. 2,42,96,210 worked out by the assessing officer in the orders impugned in appeal before us. It was then submitted that Commissioner (Appeals) has not disposed of assessees contentions on the legal grounds about the errors in computation of deduction under section 80HHC, but has rejected the claim of section 80HHC per se on a technical ground i.e., since the Annexure A to certificate on Form No. IOCCAC was on a proforma which ceased to be effective from 1-4-1992, the certificate itself is an invalid certificate and, consequently, no deduction under section 80HHC is admissible. According to the learned counsel, not only that the computation of deduction under section 80HHC has glaring errors, of law, which have not been subject-matter of judicial scrutiny by the lower appellate authority even view taken by the learned Commissioner (Appeals) regarding rejection of claim of deduction under section 80HHC per se merely because annexure A to Form 10CCAC was on old format, is a hyper-technical view and is not in consonance with the judicial precedents on the subject. The assessee, thus, claimed to have a strong prima facie case. On the strength of these submissions, it was prayed that the assessees appeal may be fixed for hearing at the earliest and, pending disposal of appeal, collection of disputed demand may be stayed. The learned counsel also prayed for stay on assessing officers giving effect to the enhancement directed by the Commissioner (Appeals), and made reference to the judgment in ITO v. Khalid Mehdi Khan, 1977 110 ITR 79 in this regard.
(3.) Shri D.K. Ghosh, learned Senior Departmental Representative, strongly opposed the stay applications. The learned Departmental Representative submitted that since the assessee has not made out a case for financial stringency nor has he alleged mala fides, it is not a fit case for grant of stay, reliance was placed on the judgment in Asstt. CCE v. Dunlop India Ltd., 1985 ECR 4. In response to Benchs specific question about prima facie merits of computation of deduction under section 80HHC by the assessing officer, the learned Departmental Representative merely submitted that the demands raised by the assessing officer have already been subject to judicial scrutiny by one appellate authority and, therefore, presumption has to be taken against the assessee. According to the learned Departmental Representative merits are required to be discussed only at the time of disposal of appeal itself. It was also submitted that grant of stay is not a matter of normal course and, therefore, merely because assessee has a good prima facie case stay should not be granted. On the strength of these submissions, the learned Departmental Representative urged us to reject the stay applications though, according to the Departmental Representative he had no objection to other prayers of the assessee being accepted.;