1998 (9) TMI 50 - HC - Income Tax

Summary

Issues Involved:
1. Rectification of apparent mistake u/s 154.
2. Allowance of 100% depreciation on bottles and crates.
3. Jurisdiction of the Assessing Officer to make adjustments u/s 143(1)(a) after issuing notice u/s 143(2).
4. Application of section 115J of the Income-tax Act.

Summary:

1. Rectification of apparent mistake u/s 154:
The dispute arises from the rectification of the so-called apparent mistake in the orders passed u/s 143(3) and u/s 143(1)(a) made in the purported exercise of power u/s 154 of the Act. The Assessing Officer issued notices for rectification, stating that there was a "mistake apparent from record regarding the calculation of book profit" due to the allowance of 100% depreciation on bottles and crates.

2. Allowance of 100% depreciation on bottles and crates:
The petitioner-company claimed 100% depreciation on glass bottles and wooden crates treating them as "plant" u/s 32(1)(ii) of the Act. The Assessing Officer initially disallowed this claim, but the Income-tax Appellate Tribunal upheld the company's contention, allowing 100% depreciation. The Assessing Officer later issued notices for rectification, reducing the depreciation to 15%.

3. Jurisdiction of the Assessing Officer to make adjustments u/s 143(1)(a) after issuing notice u/s 143(2):
Dr. Debi Pal, counsel for the petitioners, argued that after issuing notice u/s 143(2) and passing a regular assessment order u/s 143(3), the Assessing Officer cannot make adjustments or pass any order u/s 143(1)(a). The court agreed, stating that adjustments requiring investigation or adjudication cannot be made u/s 143(1)(a). The court held that the Assessing Officer had no jurisdiction to revise the intimation and recompute income u/s 154.

4. Application of section 115J of the Income-tax Act:
Section 115J obliges the Assessing Officer to compute the taxable income of a company in a particular manner. The court observed that if the taxable income was not computed correctly, the Assessing Officer should have issued notice u/s 143(2) and proceeded to assess the income accordingly. The court concluded that any mistake in the computation of taxable income under section 115J could not be corrected using the rectification power u/s 154.

Conclusion:
The court held that the Assessing Officer had no jurisdiction to revise the intimation/assessment order in the purported exercise of power u/s 154 of the Act. The impugned orders/notices were quashed. The writ petitions were allowed, and no order as to costs was made.