Case: Bhavana Chemicals Limited, Baroda Vs. Commissioner of Income Tax, Gujarat

2. Against the order of assessment for the Assessment Years1, the assessee filed an appeal claiming certain deductions which were disallowed by the Income Tax Officer. The Appellate Assistant Commissioner allowed those deductions. The order of the Appellate Assistant Commissioner was challenged by the Revenue by way of an appeal before the Tribunal. When the matter came up before the Tribunal for final hearing, the Revenue raised, what is termed, a "preliminary point" to the effect that the Income Tax Officer while computing the income of the assessee Company had erroneously brought to tax income from agriculture and had also correspondingly allowed certain expenses in connection with the agricultural operations. It was argued that the assessee had earned income from agriculture which was not subject to tax and that by allowing expenses which were connected with the agricultural activities the Income Tax Officer committed an error in making the assessment. The Tribunal accepted the said preliminary objection, allowed the appeal and remanded the matter to the Income Tax Officer for making a fresh assessment. The Tribunalor otherwise of the claim for various expenses made before us, in our opinion, would depend entirely on the question whether the impugned expenses are closely related to the agricultural activities of the assessee or not. We also feel that it will be unfair to deal only with the aspect regarding agricultural expenses without taking into consideration the fact that the assessee had alsoincome from agriculture. It is, therefore, necessary, in our opinion that the income relating to the agricultural activities of the assessee company must be segregated and onlyincome should be brought to tax. Since this aspect of the matter has been overlooked by the Income Tax Officer, we think that in the interest of justice, we must set aside these assessments and restore the matter on the file of the Income Tax Officer so that he maythe assessments in accordance with law, in the light of our above observation."The assessee filed an application under Section 256(1) asking the Tribunal to refer the above questions which, on being declined, it went to the High Court which also declined the assessees request

Reasoning:
5. We are, however, not inclined to go into this question at this stage. The matter has been remanded. Let the Income Tax Officer make an assessment. If the assessee feels aggrieved with the assessment, he can adopt the remedies provided by law wherein he can raise, inter alia, the present questions as well. In this view of the matter, we do not think it necessary to examine the question of power of Tribunal in this matter