Shriram Investments Vs Commissioner of Income Tax III Chennai (Supreme Court of India)
Whether fresh claim can be entertained by Income-tax Appellate Tribunal dehors the powers available to it u/s 254 of the Income-tax Act,1961?
The Supreme Court of India in this case was considering a situation where the time for filing revised return (whereby the claim for deferred revenue expenditure was made) had expired and thus the revised return was treated as bad in law and the first appeal was also dismissed.
The ITAT while dealing with the situation directed the AO to allow the claim of deferred revenue expenditure even though the revised return was barred by limitation.
However, the department’s appeal in Madras high court was allowed rejecting assessee’s claim.
On these facts, the Supreme Court dealt with the powers of ITAT u/s 254 to entertain an altogether new claim during the course of hearing before it in the light of decision of Supreme Court in the case of Wipro Finance and Goetze India and held that unless the ITAT exercises its plenary power u/s 254 of the Act, it could not direct the AO to consider the claim and same having not been done, the Madras High court was right in allowing department’s appeal.
