RAJESH BALIA,J. - (1.) HEARD learned counsel for the parties.
(2.) THIS is an application under S. 256(2) at the instance of CIT, Jodhpur, requiring the Appellate Tribunal to state the case and refer the two questions of law said to be arising out of order of the Tribunal in ITA No. 262/Jp/92 to this Court for its opinion. The question of law proposed are as under : "1. Whether, on the facts and in the circumstances of the case the Hon'ble Tribunal was justified in law in upholding the decision of the learned CIT(A), directing the AO to allow deduction under s. 32AB ? 2. Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was legally justified in holding that the issue of claim under S. 32AB of the Act is debatable even though the provisions of S. 32A(8) and 32AB (10) of the Act are very clear and these provisions have been further clarified by Circular No. 559, dt. 4th May, 1990 [published at (1990) 94 CTR (St) 65] of the CBDT ?" The Tribunal has refused the application under S. 256(1) for referring the aforesaid two questions to this Court. The assessee has filed the return for the asst. year 1989 90 in the first instance on 29th Dec., 1989, and the first return was processed under S. 143(1)(a) on 29th April, 1990 and a refund of Rs. 169 was also issued. In the said return the assessee has claimed the deduction on account of investment allowance under S. 32AB amounting to Rs. 61,454. Thereafter the assessee filed a revised return under S. 139(5) of the IT Act wherein the claim of deduction of Rs. 4,00,118 in respect of 'investment deposit account' was made under S. 32AB, which envisages that any amount deposited in an account maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income whichever is earlier or utilised any amount during the previous year for the purpose of any new ship, new aircraft, new machinery or plant, without depositing any amount in the deposit account under cl. (a) in accordance with, and for the purposes specified in a scheme to be framed by the Central Government, the assessee to be allowed deduction a sum equal to aggregate of the amounts so deposited and any amount so utilised or a sum equal to 25 per cent of the profits of business or profession as computed in the accounts of the assessee and audited in accordance with sub s. (5), whichever is less. This claim made in the revised return under S. 32AB was disallowed by the AO under S. 143(1B) without requiring the presence of the assessee before rejecting the claim. The assessee applied for rectification under S. 154 pointing out that since the claim under S. 32AB having been made on fulfilment of all conditions could not have been disallowed by invoking provisions under S. 143(1B) and without issuing a notice under S. 143(2) and without resorting to regular assessment under S. 143(3). The application under S. 154 of the Act was rejected by the AO by giving the reasons of disallowing the claim made by the assessee under S. 32AB for the first time in that order. The reasons disclosed in the order under S. 154 for disallowing a claim under s. 32AB in exercise of jurisdiction of S. 143(1B) were firstly that requirement of S. 32AB should have been completed before the due date of filing of return whereas the assessee has revised return after first order and prima facie the assessee's claim does not appear to have any merit. Secondly there was option for the assessee either to claim investment allowance or to claim deduction under s. 32AB in respect of eligible machinery installed during the previous year and investment made therein or amounts deposited with prescribed institutions under that section. The assessee having opted to claim investment allowance in original return which was duly processed under S. 143(1) (a) and accepted. The assessee lost his right of claiming benefit or deduction under S. 32AB through revised return of the income. Lastly, when the claim of investment allowance under S. 32A has been decided through intimation served on the assessee, according to the AO by invoking the provision of S. 143(1B) the assessee was not entitled to revise his return of income to claim investment deposit allowance under S. 32AB. As per the AO, he was not entitled to revise its return of income on the issue relating to investment allowance as the same had already been decided through the intimation. With these reasoning the application for rectification was rejected.
(3.) ON appeal CIT(A) held that all the grounds relied on by the AO for justifying the refusal of claim of deduction under S. 143(1B) are themselves debatable issues which clearly make out the case that adjustment by disallowing claim for deduction under S. 32AB under revised return could not have been apparently denied under S. 143(1B). It also referred to guidelines issued by CBDT about the power of ITO to make adjustments under S. 143(1)(a) of 143(1B) clarifying that on debatable issues no adjustment ought to be made which has not been followed by the AO, which were binding on him. The order of CIT(A) has been affirmed on further appeal of the Revenue by the Tribunal.;