1992 (11) TMI 12 - HC - Income Tax

Summary

Issues:
1. Entitlement to development rebate on new plant and machinery for construction business for assessment years 1970-71 and 1971-72.
2. Competency of appeal against levy of interest under section 215 of the Income-tax Act, 1961 for the assessment year 1971-72.

Entitlement to Development Rebate:
The court ruled that the assessee is entitled to a development rebate at the rate of 25 per cent on the new plant and machinery added and brought to use in its construction business during the relevant accounting periods for the assessment years 1970-71 and 1971-72. This decision was based on a previous judgment in a related case.

Competency of Appeal Against Levy of Interest:
For the assessment year 1971-72, the Income-tax Officer had levied interest under section 215 of the Income-tax Act, 1961. The assessee contended that the interest was charged erroneously due to a reduction in the claim for depreciation and development rebate. The Appellate Assistant Commissioner rejected the submissions. The Tribunal upheld the Revenue's preliminary objection, citing a decision of the Gujarat High Court. However, the Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd. v. CIT clarified that an assessee can appeal against the levy of interest if they dispute the levy entirely. The Tribunal was instructed to reconsider the appealability of the levy of interest under section 215 based on the Supreme Court's judgment. Consequently, the court held that the appeal against the levy of interest under section 215 for the accounting period relevant to the assessment year 1971-72 was competent, provided the assessee challenged the levy on the grounds of non-liability to the levy.

In conclusion, the court answered both questions in favor of the assessee. The first question regarding entitlement to development rebate was decided in favor of the assessee based on a previous judgment. The second question, concerning the competency of the appeal against the levy of interest under section 215, was deemed competent following the Supreme Court's clarification on the matter. No costs were awarded in this judgment.