Law:

Section:

I. Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Powers of - Assessment year 1956-57 - Whether where order passed by ITO disallowing assessee's claim was not subject-matter of appeal before Tribunal as that was not matter expressly or impliedly decided by AAC, Tribunal was right in holding that it had no jurisdiction to allow assessee to raise ground in respect of said claim - Held, yes II. Section 28(i) of the Income-tax Act, 1961 (corresponding to section 10(1) of the Income-tax Act, 1922 - Business loss/deductions - Allowable as - Assessment year 1956-57 - Assessee-firm resigned its sole selling agency of a company with effect from 31-3-1956 - During assessment year in question assessee claimed deduction of certain amount as bad debt on basis of company's letter informing that some parties had not paid for goods sold to them and that as per terms of selling agency agreement, assessee was responsible for amounts due from those parties - Whether assessee's liability accrued, in terms of selling agency agreement, when amount became due from parties to whom goods were sold, and in absence of any material to show that assessee's liability had accrued in relevant accounting year, assessee was not entitled to claim deduction under section 10(1) of 1922 Act - Held, yes FACTS I The ITO disallowed the assessee's claim for deduction in respect of legal expenses. The assessee did not contest this disallowance in its appeal before the AAC nor did it take it as a ground in its second appeal before the Tribunal. Later, by an application assessee sought leave to raise the said ground, but the Tribunal rejected that application, on the ground that the assessee had not kept alive its claim for the said deduction before the AAC. On reference; HELD I In the instant case, the order passed by the ITO disallowing the claim of the assessee for deduction of legal expenses was not the subject-matter of appeal before the Tribunal as that was not the matter expressly or impliedly decided by the AAC. The Tribunal was, therefore, right in holding that it had no jurisdiction to allow the assessee to raise the ground in respect of the claim for deduction of legal expenses.…

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