TAXAP/20/2005 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 20 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ============================================================== M/S. MUKESH POULTRY FARM - Appellant(s) Versus THE INCOME-TAX OFFICER - Opponent(s) ============================================================== Appearance : MR JP SHAH FOR MR. MANISH SHAH for Appellant MR TANVISH U BHATT for Opponent(s) : 1, ================================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 11/10/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) TAXAP/20/2005 2/6 JUDGMENT 1.On 12/9/2005, this Court had issued notice for final disposal in relation to proposed question No.4. Having heard the learned counsel appearing on behalf of the appellant and the respondent, ADMIT. The following substantial question of law arises for determination : “Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in not entertaining the ground regarding relief under Section 80JJ of the Income Tax Act, 1961?” 2.As the facts lie in a very narrow compass and in light of the view that the Court is inclined to take, the appeal is taken up for final hearing and disposal today with the consent of the learned counsel. 3.For assessment year 1994-95, the assessee filed return of total income of Rs.5,586/- after claiming deduction of Rs.2,792/- under Section 80JJ of the Act. The assessing officer granted the said deduction, as can be seen from the assessment order dated 26/2/1999 when he commenced the computation of total income by taking the income as per the statement annexed with the return of income. However, he made addition of various sums by TAXAP/20/2005 3/6 JUDGMENT treating the business income of three other entities as part of the business carried on by the assessee and thus, assessed the assessee at a total income of Rs.19,84,500/-. 4.The assessee succeeded partly before the Commissioner (Appeals), who restricted the addition by modifying the basis by adding net profit of 25% on total turnover of Rs.44,43,096/- so as to include all additions / disallowances, including lumpsum additions as well as unexplained cash credits. The order of Commissioner (Appeals) was challenged both by the assessee and the revenue before the Tribunal. However, the Tribunal confirmed the order of CIT (Appeals), dismissing both the appeals. 5.In relation to the claim for deduction under Section 80JJ of the Act, the Tribunal has observed as under : “8. In the assessee's appeal, a ground was raised for 80JJ deduction. We find that this ground was not pressed by the assessee either before the AO or before the CIT (A) and it requires investigation of facts to entertain the same. We, therefore, decline the TAXAP/20/2005 4/6 JUDGMENT additional ground at this stage.” 6. Thus, it appears that all the parties, including the assessee, lost sight of the fact that the claim for deduction under Section 80JJ of the Act had already been made and allowed by the assessing officer. What the assessee was claiming before the Tribunal was additional relief, as an alternative, if the assessee's principal challenge to the addition sustained by Commissioner (Appeals) was upheld by the Tribunal. Once the assessee failed in its challenge and the Tribunal confirmed the addition sustained by CIT (Appeals), as a natural corollary, the assessee would be entitled to additional relief under Section 80JJ of the Act. The said section provides for deduction in respect of profits and gains from business of poultry farming. Admittedly, the addition has been made and sustained by Commissioner (Appeals) and Tribunal by treating the business of the poultry farming carried on by three other entities as being business carried on by the assessee. Thus, the fact that the income is from business of poultry farming is not in dispute. 7.Once this is the position, the assessee would be TAXAP/20/2005 5/6 JUDGMENT entitled to the relief under Section 80JJ of the Act at the appropriate rate from the profits of the business of poultry farming. The Tribunal, therefore, committed an error in law in recording a finding to the effect that the ground was not pressed by the assessee either before the assessing officer or before the Commissioner (Appeals) and it requires investigation of facts to entertain the same. In fact, the claim was very much made before the assessing officer, as can be seen from the acknowledgment of return of income and the accompanying statement of total income which was part and parcel of the paper-book filed before the Tribunal at pages 1 to 5. As recorded hereinbefore, the computation of total income in the assessment order commenced from the figure of income as per statement of income accompanying the return. Therefore, to state that no claim was made before the assessing officer is factually incorrect and erroneous. The Tribunal itself having sustained the addition of the three other entities in the hands of the assessee by treating the total turnover of all the four entities, including the assessee, as turnover of one single business i.e. business of poultry farming, there was no further investigation of facts required in the circumstances. TAXAP/20/2005 6/6 JUDGMENT 8.In the circumstances, the impugned order of Tribunal dated 5/4/2004 is quashed and set aside to the limited extent of the ground relating to deduction under Section 80JJ of the Act and the appeal, being assessee's appeal bearing I.T.A. No. 3461/Ahd/2002, is restored to file for the limited extent. The Tribunal shall decide the said ground on merits in accordance with law. 9.This appeal is accordingly allowed and stands disposed of. There shall be no order as to costs. [D.A.MEHTA, J.] [HARSHA DEVANI, J.] parmar*