Law:

Section:

Section 251 of the income-tax act, 1961-Appellate assistant commissioner-Powers of-ITO disallowed certain items of expenditure in assessments-AAC disposed of appeals simultaneously for three assessment years and allowed deduction in different assessment years vis-a-vis claimed before ITO in another assessment year-Tribunal upheld AAC's order-Whether tribunal correct in law-Held, on facts, yes Facts The assessee-firm claimed certain items of expenditure as deductible against profits for the assessment years 1965-66, 1966-67 and 1967-78. The ITO rejected the claims on the ground that, since the assessee followed the mercantile system of accounting, the deductions claimed did not fall for consideration during the year in which they had been claimed. On appeal, the AAC took up all the appeals for hearing together and found that, although some expenses were not allowable for the year for which they had been claimed, they were duly admissible against the profits of another year of which he was in seisin in appeal. While upholding the disallowance of expenses claimed against the profits of a particular year, the AAC allowed it against the profits of another year which also was in appeal before him. The Tribunal found that there was no dispute that the expenses were allowable, the only dispute being about the year of allowance. It, therefore, upheld the AAC's order. On reference, the revenue contended (i) that the AAC was not competent to give any finding with regard to any item of expenditure while considering the appeal for one year so as to affect the assessment of another year ; and (ii) that each year of assessment was a unit by itself and all findings or considerations or observations made in connection with one particular assessment year must remain confined to it. Held 1. There is no provision in the Act which debars the AAC from simultaneously taking up appeals against assessment for a number of assessment years. When assessments for a number of years are being considered together at one and the same time, if an item of expenditure which, though processed and disallowed at the assessment stage by the ITO, is again claimed to be admissible against the profits…

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