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In the case of CIT v. Mahalakshmi Textile Mills Ltd. (66 ITR 710) the assessee company all along in the course of assessment and before the first appellate authority claimed certain expenditure as plant and thus entitled to both depreciation and development rebate. Both the authorities refuted the claim. In the alternative, for the first time the assessee-company claimed before the Tribunal that the amount laid out was in any event expenditure for current repairs and, therefore, admissible for 100% deduction otherwise. The Tribunal though disallowed the claim of the assessee-company for development rebate upheld the expenditure as admissible deduction. In appeal, at the instance of the Commissioner, the Supreme Court held that the Appellate Tribunal was competent to grant the relief as it did since there was no restriction in the Act on the jurisdiction of the Tribunal to determine a question not raised before the departmental authorities, and all questions, whether of law or of fact, which relate to the assessment of the assessee, may he raised before the Tribunal, and if the grant of relief on either ground is justified, it would be open not only to the Tribunal but also to the departmental authorities to grant such relief as they were duty bound under law to do so, and the right of the assessee to the relief’s is not restricted to the plea raised by him.

Further in the case of Swastic Textile Co. Pvt. Ltd. Vs. Commissioner of Income-tax (150ITR155) the ITO held that receipts from erection charges, rent received on hire of machinery, export incentive and profit on sale of assets were not of manufacturing activity and, therefore, not entitled to be included in the manufacturing profit for the purpose of computation of deduction under s. 80-I. In the course of the hearing of the appeal, the assessee claimed that the ITO, and for that matter the AAC, were not justified in deducting the gross sums since, in the very nature of things, the assessee had spent some amounts for purposes of earning erection charges, or rent for hiring out the machinery or for export of goods or in sale of the assets. The Tribunal could not persuade itself to accept this alternative claim of the assessee since in its opinion the assessee did not press this in the memo of appeal as one of its grounds on which it was aggrieved by the order of the AAC and, in any case, it was not open to the assessee to raise this claim at that late stage. The appeal of the assessee, therefore, failed before the Tribunal.

Following the Apex Court ruling the Gujarat High Court in this case held that the Tribunal was not justified in the present case before us in rejecting the claim of the assessee which it had alternatively urged since, in the ultimate analysis, as has been rightly submitted by the learned counsel for the assessee, the question was as to what items should be excluded either wholly or partially from the manufacturing profit for purposes of computing the deductions under s. 80-I of the I. T. Act, 1961. The subject matter cannot be said to be a different subject matter.

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