Law: Income Tax Act, 1961

Section: 253(4),254(4)

(a) Income-tax---Appeal to Appellate Tribunal---Powers of Tribunal---Respondent before Tribunal, though he may not have appealed, may support order appealed against on any of grounds decided against him by First Appellate Authority-¬Indian Income Tax Act, 1961, Ss.253(4) & 254(4)---Indian Income-tax (Appellate Tribunal) Rules, 1963, Rr.22 & 27. (b) Income-tax---Capital or revenue expenditure ---Assessee, a manufacturer of electronic equipment---Acquisition of designs and drawings for the manufacture of power line carrying communication equipment---Rapid changes take place in electronics industry due to fast technological developments and new inventions or systems become obsolete in short duration---Expenditure incurred is only for improving efficiency or profit earning apparatus--¬Advantage is not of permanent degree---Expenditure incurred is revenue expenditure---Indian Income Tax Act, 1961, S.37. The respondent, before the Appellate Tribunal, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. The provisions of Rules 22 and 27 of the Income Tax (Appellate Tribunal) Rules, 1963, provide for the occasion but section 253, subsection (4) of the Income Tax Act, 1961, dealing with the powers of the Appellate Tribunal in regard to the appeals before it, recognises the right of the respondent, "notwithstanding that he may no have appealed against such order or any part thereof" to agitate and to be heard in the matter. This is because, section 253(4) of the Act endorses the situation of finality with regard to the orders passed by the Appellate Tribunal. In view of the above reasons the Appellate Tribunal under resort to Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, would be justified in considering the contention raised by the assessee in the Departments appeal on points in regard to -which the First Appellate Authority had decided against him. The assessee was a manufacturer of electronic equipment. For the assessment year 1979-80, the assessee claimed deduction under section 37 of the Income Tax Act, 1961, as revenue expenditure, of a sum of Rs.5 lakhs paid to a foreign company…

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