ORDER
M. A. Bakshi, J. M.
The appeal of the assessee, for assessment year 1985-86, is directed against the order dated 20-8-1990, of Commissioner (Appeals)-I, Mumbai. Rival contentions have been heard and records perused.
2. Ground Nos. 2, 3, 4, 6, 7 and 8, which are reproduced hereunder, are dismissed as not pressed.
“2. The learned Commissioner (Appeals)-I, Bombay, erred in reckoning the expenses on repairs, payment of rent, rates and taxes in respect of residential flats occupied by the Directors and employees of the appellant as perquisite within the meaning of section 40A(5) and confirming the disallowance of Rs. 1,88,104 in case of Directors and Rs. 3,86,569, in case of employees in place of disallowance under section 40(c) at Rs. 82,085 and under section 40A(5) at Rs. 7,825 as Annexures ‘B’ and ‘C’.
3. On the facts and in the circumstances of the case, the learned Commissioner (Appeals)-I, Bombay, erred in disallowing under section 43B of the Income Tax Act, the sales tax liability of Rs. 22,78,693.
4. The learned Commissioner (Appeals)-I, Bombay, erred in confirming disallowance of the following two amounts of expenses under section 37(2)(A) of the Income Tax Act, 1961.
(i) Rs. 83,078 being conference expenses.
(ii) Rs. 5,70,725 being expenses incurred by the employees while visiting dealers and customers.
6. The learned Commissioner (Appeals)-I, Bombay, erred in confirming the disallowance of expenses of Rs. 30,300 being payment for services other than lodging and boarding at hotels and computed the disallowance under section 37(3A) of the Income Tax Act.
7. The learned Commissioner (Appeals)-I, Bombay, erred in confirming disallowance of the claim under section 80J of Rs. 8,48,270 in respect of the new industrial undertaking by the appellant. The undertaking commenced commercial production on 1-4-1981.
The learned Commissioner (Appeals)-I, Bombay, eared in interpreting the words “at any time within the period of 33 years next following the 1-4-1948”. It is respectfully submitted that the plain meaning of these words on or before the close of 1-4-1981 and not “31-3-1981” as interpreted by the learned Commissioner (Appeals)-I, Bombay.
8. The learned Inspecting Assistant Commissioner has levied interest under section 217 of the Income Tax Act, 1961, amounting to Rs. 20,71,431. Your appellants accounting year ends on 30 September and in respect of assessment year 1985-86, if advance tax was required to be paid, the first instalment of advance tax fell due on 15-6-1984. Your appellants would also have been required to file Form No. 28A read with section 209A on or before 15-6-1984. In terms of section 209A, Form No. 28A had to be based either on the income as per latest completed assessment or income for a later year, if tax had been paid under section 140A. In your appellants case, as on 15-6-1984, the last completed assessment was for assessment year 1981-82 wherein, a loss of Rs. 14,56,286 was determined and allowed to be carried forward. Your appellants were not required to pay tax under section 140A in respect of any subsequent year. As such, your appellants were under no obligation to file a statement of income in Form No. 28A read with section 209A and pay advance tax on 15-6-1984. Further, there was no obligation to file an estimate in Form No. 29 unless Form No. 28A had been filed.
On the facts and in the circumstances of the case, your appellants deny the liability to pay advance tax and consequently, liability to pay interest under section 217.”
3. The surviving grounds are Ground Nos. 1 and 5. Besides, the assessee has raised an additional ground of appeal by way of an application, which reads as under:
“The learned Commissioner (Appeals)-I, Mumbai erred in confirming the disallowance of Rs. 4,25,099 and Rs. 1,00,000 under section 37(3A) and 37(3B) of the Income Tax Act, 1961 being repairs to vehicles and on estimate basis insurance, taxes and driver’s salary. These are allowable under section 31 of the Income Tax Act, 1961 and not under section 37(1) and hence provisions of sections 37(3A) and 37(3B) of the Income Tax Act, 1961, are not applicable to this.”
4. The learned counsel for the assessee contended that the assessing officer has dealt with the issue relating to the disallowance of Rs. 4,25,099 and Rs. 1,00,000 in the assessment order. The assessee had raised the ground of appeal before the Commissioner (Appeals) being Ground No. 5(a). The Commissioner (Appeals) has also dealt with this issue in the appellate order. However, the assessee omitted to raise the ground of appeal originally before the Tribunal. Placing reliance on the decision of the Bombay High Court (Full Bench) in the case of Ahmedabad Electricity Co. Ltd. v. CIT (1993) 199 ITR 351 (Bom) (FB), the learned counsel for the assessee contended that the ground being purely legal in nature, the same arising out of the order of the revenue authorities and there being material on record to decide this ground, the additional ground has got to be admitted and disposed of on merits. In response to the query from the Bench as to why this ground of appeal was omitted to be raised before the Tribunal in the Memo of Appeal, the learned counsel argued that it was not necessary for the assessee to explain the reasons for the omission and that on the authority of’ the Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. (supra), the Tribunal is bound to admit the ground of appeal. The attention of the learned counsel was also invited to the decision of the Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT (1991) 187 ITR 688 (SC), wherein their Lordships of the Supreme Court have held that additional ground can be raised before the Appellate Assistant Commissioner if the ground so raised could not have been raised at the stage when the return was filed or when the assessment order was made or if the ground became available on account of change of circumstances. In reply the learned Counsel contended that the Bombay High Court have considered this decision in the case of Ahmedabad Electricity Co. Ltd. (supra) and therefore, it was not necessary for the assessee to satisfy the Tribunal about the existence of valid grounds for having omitted to raise the ground of appeal in the Memo of Appeal.
5. The learned departmental Representative, on the other hand, strongly relied upon the decision of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra) and contended that it is the duty of the assessee to satisfy the Tribunal about the existence of valid grounds for the omission of the additional ground of appeal. The decision of the Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. (supra), according to the learned Departmental Representatrive, is inapplicable to the facts of this case. It was pointed out that the said decision was on the issue as to whether the Tribunal has the power to admit additional ground of appeal. It was accordingly contended that the additional ground raised by the assessee be not admitted.
6. We have given our careful consideration to the rival contentions. The issue before us is not as to whether the Tribunal has the power to admit the additional ground of appeal. On the other hand the issue before us is as to whether the Tribunal is duty bound to admit the additional ground of appeal notwithstanding the fact that the assessee does not explain the circumstances on the basis of which such ground could not be raised earlier. Section 253 of the Income Tax Act, 1961, provides for an appeal to the Tribunal against various decisions of the Income Tax Authorities referred to therein. Sub-section (3) of section 253 provides the limitation of 60 days from the communication of the order sought to be appealed. Though there is limitation of 60 days under sub-section (3), sub-section (5) of section 253 empowers the Tribunal to permit the filing of the appeal or memorandum of cross-objection after the specified period if it is satisfied that there was sufficient cause for not presenting it within that period.
7. In the case where the appellant files an appeal within the period of limitation, a situation may arise where it becomes necessary to raise an additional round of appeal in view of certain circumstances. There may be several factors justifying the raising of such a new plea in an appeal. In such circumstances, whether the period of limitation should come in the way of the assessee raising such additional ground of appeal, the settled law as of today is that the appellate authorities if satisfied that the additional ground raised was bona fide and the same could not have been raised earlier for good reasons, may in its discretion, permit the assessee to raise an additional ground even after the expiry of the limitation provided for filing an appeal. The Tribunal has got the discretion to either admit the additional ground of appeal or not to admit the same. When we say that the Tribunal has the discretion it does not mean that the Tribunal does not have the duty to exercise the discretion judiciously. It is the duty of all the judicial authority to exercise its discretion most judiciously. Therefore, when a discretion is vested in the judicial authorities, it is duty bound to satisfy itself about the existence of the good reasons before exercising the discretion in favour of the assessee. The contention of the learned counsel for the assessee that the Tribunal is bound to admit every additional ground of appeal is bereft of substance, and in our view misconceived.
8. Their Lordships of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra), held as under:
“The observations in the case of Addl. CIT v. Gurjargravures (P.) Ltd. (1978) 111 ITR 1 (SC) do not rule out a case for raising an additional ground before the Appellate Assistant Commissioner if the ground so raised could not have been raised at the stage when the return was filed or when the assessment order was made or if the ground became available on account of change of circumstances or law. There may be several factors justifying the raising of such a new plea in an appeal, and each case has to be considered on its own facts. If the Appellate Assistant Commissioner is satisfied, he would be acting within his jurisdiction in considering the question so raised in all its aspects. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. While permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason.”
9. It is evident from the decision of the Supreme Court quoted above that it is the duty of the appellant to satisfy the appellate authority that the additional ground raised was a bona fide and the same could not have been raised earlier for good reasons. It may be pertinent to mention that their Lordships of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra) did not overrule the decision in the case of Addl. CIT v. Gurjargravures (P) Ltd. (1978) 111 ITR 1 (SC) but clarified the law on the issue. The said judgment of the Supreme Court, however, does not lay down the law that the Appellate Assistant Commissioner or the Tribunal is bound to admit every additional ground of appeal raised by the assessee if it arises out of the impugned order. If that view is taken, it will defeat the provisions of the Act, which provide for limitation for filing of the appeals.
10. The decision of the Bombay High Court relied upon by the learned counsel for the assessee, in the case of Ahmedabad Electricity Co. Ltd. (supra), also does not support the view canvassed by the learned counsel. The issue before their Lordships of the Bombay High Court in the case of Godavari Sugar Mills Ltd. v. CIT (1993) 199 ITR 351 (Bom), was about the powers of the Tribunal. After discussing the case law, their Lordships held that the ratio of the judgment of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra), which is in relation to the powers of the Appellate Assistant Commissioner, cover all appellate authorities under the Income Tax Act. Their Lordships further held that the Appellate Tribunal has jurisdiction to permit additional grounds to be raised before it even though these may not arise from the order of the Appellate Assistant Commissioner, so long as those grounds are in respect of the subject matter of the entire tax proceedings. Though their Lordships held that the Tribunal has the power to admit the additional ground of appeal, it has not laid down the law that the Tribunal should admit the additional ground of appeal without being satisfied as to why such a ground was not raised in the Memo of Appeal. The Bombay High Court referred to its earlier decision in the case of CIT v. Western Rolling Mills (P.) Ltd. (1985) 156 ITR 54 (Bom) and the relevant para is contained at page 369 which is reproduced hereunder:
“The ratio of this judgment would apply to the jurisdiction of the Appellate Tribunal also. The observations of the Supreme Court, in fact, cover all appellate authorities under the Income Tax Act. We do not find anything in section 254(1) of the Income Tax Act which limits the jurisdiction of the Appellate Tribunal in any manner. For reasons which we have set out earlier, the phrase “pass such order thereon” does not in any way restrict the jurisdiction of the Tribunal but, on the contrary, confers the widest possible jurisdiction on the Appellate Tribunal including jurisdiction to permit any additional ground of appeal if, in its discretion, and for good reason, it thinks it necessary or permissible to do so. (See also in this connection a decision of the Bombay High Court in the case of CIT v. Western Rolling Mills (P.) Ltd. (1985) 156 ITR 54 (Bom).”
11. It is observed from the above para that reference has been made to the discretion of the Tribunal to admit additional ground of appeal for good reasons if it thinks necessary or permissible to do so.
12. Their Lordships of the Bombay High Court have also reproduced the relevant portion from the decision of the Supreme Court in the case of Jute Corn. of India Ltd. (supra), wherein their Lordships of the Supreme Court have hold that the Appellate Assistant Commissioner must be satisfied that the additional ground so raised was bona fide and the same could not have been raised earlier for good reasons. Their Lordships of the Bombay High Court have also pointed out that the Supreme Court said that it was not overruling the decision in the case of Gurjargravures (P.) Ltd. (supra), since it could be distinguished on facts.
13. It is thus evident from the decision of the Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. (supra), as well as the decision of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra), that whereas the Tribunal has the discretion to allow raising of additional ground of appeal, it has to be satisfied about the existence of good reasons for the omission of the ground at the original stage.
14. Since in this case the learned counsel for the assessee has insisted that he is not bound to give any reason for omission of the additional ground in the Memo of Appeal filed before the Tribunal, we have no option but to decline to exercise the discretion in favour of the assessee. As already pointed out, the discretion vested in the judicial authority cannot be exercised arbitrarily. There is a duty upon the Tribunal to exercise the discretion in a most judicial manner. When the requirement of law is to satisfy the Tribunal about the existence of good reasons for the omission of the ground in the original appeal then on the failure of the assessee or his representative to give any reason much less a good reason for the omission, the consequences are obvious. In the given circumstances we cannot entertain the additional ground of appeal raised by the assessee. The same is therefore not entertained.
15. We now deal with Ground Nos. 1 and 5 of the appeal, which survive for our consideration.
16. Ground No. 1 relates to the computation of disallowance under rule 6D. The assessee had computed the disallowance by consolidating the total amount spent under the head. The assessing officer held that as per rule 6D, the disallowance was to be computed on the basis of each and every tour separately. The learned counsel for the assessee relied upon the decision of the Bombay Bench of the Tribunal in the case of AAA v. ITO (Second) (IT Appeal No. 3294 (Bom) of 1981] for assessment year 1978-79 order dated 1-2-1983, in support of the contention that the disallowance is to be computed on the basis of consolidated trips and not on the basis of each trip. It was pointed out that the Tribunal has referred to the decision of the Andhra Pradesh High Court in the case of CIT v. Coramandel Fertilisers Ltd. (1996) 220 ITR 298 (AP) where a contrary view has been taken.
17. We have given our careful consideration to the rival contentions. In our view, the disallowance is justified. As per rule 6D, the disallowance is to be computed in accordance with each trip and not on the basis of the consolidated trips. This view is supported by the decision of the Andhra Pradesh High Court in the case of Cormandel Fertilisers Ltd. case (supra). A similar view has been taken by the Bombay High Court in the unreported case of CIT v. Acrow India Ltd. (1991) 188 ITR 485 (Bom). Therefore, the contention on behalf of the assessee is not accepted. We may clarify that the assessing officer in the absence of details of each trip, had made a consolidated disallowance of Rs. 2,00,000 as against the disallowance of Rs. 1,47,560 calculated by the assessee. The Commissioner (Appeals) has allowed relief on account of conveyance expenses, which is not subject-matter of appeal before us. The disallowance sustained by the Commissioner (Appeals) is accordingly confirmed.
18. Ground No. 5 is relating to the disallowance under section 37(3A) in respect of advertisement expenses amounting to Rs. 32,13,965. It was contended before us that the expenditure on account of advertisement is covered under section 37(3) which was inserted with effect from 1-4-1964. Section 37(3A) restricts the allowance of expenses which are allowable under section 37(1). It was contended that since the said section does not refer to section 37(3), it is evident that the advertisement expenses are not covered under section 37(3A). Reliance was placed on the decision of the Bombay High Court in the case of CIT v. Chase Bright Steel Ltd. (No. 1) (1989) 177 ITR 124 (Bom) in support of the contention that when a deduction is permissible under a specific provision, the disallowance cannot be made under a general provision.
19. The learned Departmental Representative, on the other hand, contended that the disallowance is c1early warranted under section 37(3A) and that there is no merit in the contentions advanced on behalf of the assessee.
20. We have given our careful consideration to the rival contentions. Section 37 is a residuary section. It provides for deduction in respect of any expenditure not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly or exclusively for the purposes of business………. As is evident from the language of section 37, the expenditure which is specifically covered under sections 30 to 36 does not fall within the ambit of section 37. The decision of the Bombay High Court in the case of Chase Bright Steel Ltd.(No.1) (supra) was relating to the expenditure which was covered under section 31 and it was held that since the expenditure was covered specifically under section 31, the same does not fall within section 37 and the restrictions under various sub-clauses of section 37 would not apply in respect of such expenditure. Here, we are concerned with an expenditure which falls within the residuary provisions of section 37 itself. Therefore, the decision of the Bombay High Court in the case of Chase Bright Steel Ltd. (No. 1) (supra) is inapplicable. In our view section 37(1) provides for deduction of expenditure. Sub-section (3) restricts the allowance and sub-section (3A) puts further restrictions for the allowance of deduction. The contention on behalf of the assessee that sub-section (3) provides for a deduction in respect of the advertisement expenses is not well founded. It is sub-section (1), as already pointed out, which permits deduction in respect of the expenditure not falling under sections 30 to 36 and not being of capital nature. Therefore, in the case of advertisement expenses, the deduction would be permissible under section 37 within the limits under sub-section (3). Out of the said qualifying amount 20 per cent thereof has got to be disallowed. In this view of the matter, we do not find any infirmity in the order of the Commissioner (Appeals) in having upheld the disallowance.
21. In the result, appeal of the assessee is dismissed.