- (1.) By this reference application, the Tribunal has referred the following questions set out at page 2 of the application for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing deduction in computing the capital employed under Section 80J of the Income-tax Act, 1961, and the amount of Rs. 1,45,206 being the expenditure on incomplete capital jobs ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the fixed deposit of Rs. 5,13,36,000 should be included in the capital employed for the purpose of Section 80J of the Income-tax Act, 1961 ?"
(2.) In the first original assessment, the assessee claimed a sum of Rs. 1,45,206 representing expenditure on incomplete capital jobs, should be taken into account in the capital employed for the purpose of Section 80J of the Income-tax Act, 1961. Similarly, the assessee claimed a sum of Rs. 5,13,36,000, which was in the bank as fixed deposit should also be treated as capital employed for the purpose of Section 80J of the Act. The Income-tax Officer did not allow the claim of the assessee. The Appellate Assistant Commissioner has directed the Income-tax Officer to include Rs. 1,45,206 being the expenditure on incomplete capital jobs and also Rs. 5,13,36,000 fixed deposits in banks in the assets while computing the capital for the purpose of Section 80J of the Act.
(3.) In giving effect to the order of the Appellate Assistant Commissioner, the Income-tax Officer again did not include both the amounts, while computing the capital employed for the purpose of Section 80J of the Act. In fact, the Income-tax Officer has no authority to ignore the direction of the appellate authority. He has committed a gross error. In the cases where for one reason or other the order of the appellate authority is wrong, the Income-tax Officer has no authority to ignore the direction unless that appeal order has been set aside. Admittedly, that appeal order of the Appellate Assistant Commissioner has not been challenged by the Revenue before the Tribunal.;