ITAT Powers of Enhancement of assessment
Sanmar Speciality Chemicals Ltd. v. ITO
Decision: In assessee’s favour by way of remand.
Revenue raised a substantial question of law whether the Tribunal was right in directing the AO to determine the depreciation or business loss of each year and to carry forward the lower of two for adjustment which would result in enhancement of assessment for which the Tribunal has no power.
It was found that there was no error in the order passed by the Tribunal in remanding the matter for fresh consideration to the AO. In any event, the Tribunal has no power under the Income Tax Act to enhance the assessment in an appeal. Equally, it could not be done on an order of remand being passed by the Tribunal to the AO. Therefore, it was sufficient to clarify the legal position as held by the Supreme Court in Hukumchand Mills Ltd. v. CIT (1967) 63 ITR 232 (SC) and in MCORP Global (P.) Ltd. v. CIT (2009) 309 ITR 434 (SC) followed by the High Court of Gujarat in Fidelity Shares & Security Ltd.’s case (supra). The AO, while reconsidering the matter on remand, should bear the above legal principle in mind and the assessee could not be denied, whatever benefit he had granted in the assessment order.