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Section 253 of the I ncome-tax Act, 1961, read with rule 11 of the Income-tax (appellate tribunal) rules, 1963-Appeal to appellate tribunal-Additional SC grounds of-AAC accepting assessee's claim reduced disallowance of interest made by ITO under section 40(b)-Revenue, in its appeal before tribunal filed on last permissible date did not object to such reduction but subsequently sought to raise additional grounds challenging AAC 's order on that point on the basis of CBDT's circular issued before appeal was filed-Whether altogether new subject-matter of appeal can be raised as additional grounds under rule 11 of the appellate tribunal rules-H eld, no - Whether in instant case tribunal was justified in not entertaining additional grounds - H eld, on facts, yes - Whether tribunal justified in holding that no adequate ground was made out to condone delay in filing additional grounds - Held, on facts, yes Facts The assessee, a partnership firm, had paid some interest to its partners and had also received some interest from those partners which was credited to the firm's interest account. The ITO, inter alia, disallowed the interest paid to the partners by invoking the provisions of section 40(b), but he did not take into consideration the interest paid by the partners to the firm while making the disallowance. On appeal, the AAC, inter alia, upheld the assessee's contention that the interest paid by the partners should have been adjusted before meeting the disallowances under section 40(b). In its appeal before the Tribunal filed on the last permissible date, viz., 7-11-1975, the revenue confined itself to a single item of expenditure pertaining to tea and messing charges and did not object to the AAC's order regarding adjustment of interest paid by the partners. Subsequently, on 28-11-1976, the revenue sought to raise additional grounds challenging the AAC's view on the abovementioned adjustment of interest on the strength of a CBDT's circular. The Tribunal, however, refused to entertain the additional grounds on the plea of time-bar, holding that there was no sufficient ground to condone the delay, as the impugned CBDT's circular, on which reliance was placed by…

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