Claims for deduction or non-taxability of receipts not claimed in the original assessment can be made in reassessment proceedings. However, if a claim was considered and rejected in the original assessment, it cannot be reagitated in the reassessment proceedings.

Y. V. ANJANEYULU, J.

( 1 ) THIS reference under section of the Income-tax Act, 1961, made by the Income-tax Appellate Tribunal at the instance of the assessee relates to the assessment years 1963-64 to 1971-72 (both the years inclusive ). Two questions are referred by the Tribunal for the consideration of this court and they are :"1. Whether, on the facts and in the circumstances of the case, investment in securities made by the assessee in pursuance of section 24 of the Banking Regulation Act being a statutory obligation can be treated as a transaction in the course of carrying on of trade ? 2. Whether, on the facts and in the circumstances of the case, the assessee is precluded from agitating the claims relating to gratuity, pension fund and staff welfare expenses for all the years and the difference arising out of the devaluation of the rupee to the extent of Rs. 11,04,484 for the assessment year 1967-68 and Rs. 57,530 for the assessment year 1968-69 in the reassessment proceedings under section 147 especially when in the assessments relating to the subsequent assessment years the said claims were allowed ?"

( 2 ) SO far as the first question is concerned, it is common ground that it is covered against the assessee by the decision of this court in State Bank of Hyderabad v. CIT [1985] 151 ITR 703 (AP ). We accordingly answer the question in the affirmative, that is to say, in favour of the Revenue and against the assessee.

( 3 ) THE facts concerning question No. 2 may be noticed. The assessments were initially made under section 143 (3) of the Income-tax Act for the years 1963-64 to 1971-72 (both the years inclusive ). These assessments were reopened under section 148 as it was found that certain income escaped assessment in the original proceedings. Pursuant to the notices under section 148, the Income-tax Officer completed the assessments for all the years. During the course of the reassessment proceedings, the assessee claimed deduction on account of liability towards gratuity as per actuarial valuation; the assessee also claimed deduction on account of liability towards pension fund as per actuarial valuation. Claim for deduction was made by the assessee towards labour welfare expenses also. It was further claimed, during the course of reassessment enquiry for the years 1967-68 and 1968-69, that the surplus arising on account of devaluation of the rupee to the extent of Rs. 11,04,484 and Rs. 57,530, respectively, was not liable to be assessed as income. The Income-tax Officer rejected the claims for deduction of actuarial valuation on account of gratuity and pension fund and also the claim for deduction of labour welfare expenses. The Income-tax Officer also rejected the claim that the surplus arising on account of the devaluation of the rupee for the assessment years 1967-68 and 1968-69 was not liable to be taxed. We may point out at this stage that in the assessment orders the Income-tax Officer observed that the claim for deduction of actuarial valuation on account of gratuity and pension fund was made in the original assessments and was rejected and it was not, therefore, permissible for the assessee to reagitate these claims in the reassessment proceedings. So far as the labour welfare expenses were concerned, it would appear from the Income-tax Officers observations that the claim was allowed in the original assessment proceedings to the extent claimed, but further sums were claimed by way of deduction during the course of the reassessment enquiry. The Income-tax Officer held that inasmuch as the claim for deduction of these further sums by way of labour welfare expenses was not made in the original assessment proceedings, it was not liable to be allowed. We may also point out that the Income-tax Officer had discussed the merits relating to the allowability of the claim for deduction on account of gratuity and pension fund and held that it was not liable to be allowed in any event.

( 4 ) THE assessee preferred appe

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