KATIHAR JUTE MILLS P LTD Vs. COMMISSIONER OF INCOME TAX CENTRAL A

JUDGEMENT

(1.) This reference under Section 66(1) of the Indian I.T. Act, 1922 (hereinafter referred to as "the Act") is at the instance of the assessee, Katihar Jute Mills (P.) Ltd., Howrah. The relevant assessment year is 1955-56 for which the relevant accounting year is the calandar year 1954. The facts found by and/or admitted before the Tribunal areas follows : The assessee is a limited company owning a jute mill. The original assessment under Section 23(3) of the Act was made on the 27th January, 1960. In the said assessment a sum of Rs. 5,22,450 was brought to tax representing the price of loom hours.

(2.) The assessee preferred an appeal before the AAC with regard to two points, namely, (1) treatment of the loss in speculative transactions, and (2) certain disallowances out of expenses. The AAC disposed of the appeal in the following terms :

(3.) Thus the assessment went back to the ITO to be made afresh, which was not made by the ITO till 27th September, 1965. It appears, that in the meantime on the 25th April, 1965, the Supreme Court delivered its judgment in CIT v. Maheshwari Devi Jute Mills Ltd. [1965] 57 ITR 36 holding that the proceeds from sale of loom hours were of a capital nature, not assessable as income. The assessee, therefore, filed a revised return on 7th September, 1965, claiming that the sum of Rs. 5,22,450 representing the sale proceeds of loom hours was not taxable. The ITO was of the view that this claim of the assessee could not be considered at that stage because in the original assessment made on the 27th January, 1960, the said sum of Rs. 5,22,450 was included in the income of the assessee and the assessee did not prefer any appeal against this issue before the AAC. The ITO was also of the view that in view of the specific direction of the AAC to confine the enquiry to speculation loss only, he had no power at all to add to or allow any other item of income or expenditure. The ITO, accordingly, rejected the assessee's request for excluding the sum of Rs. 5,22,450 and passed a fresh assessment order dated 27th September, 1965.