1993 (6) TMI 28 - HC - Income Tax

Summary

Issues:
1. Entitlement to development rebate for the assessment year 1972-73.
2. Liability to pay sales tax and its impact on claiming development rebate.
3. Correct assessment year for claiming development rebate.
4. Tribunal's decision to reverse the order of the Appellate Assistant Commissioner.
5. Commissioner's role in granting development rebate under section 154.

Analysis:
The judgment addresses the issue of entitlement to development rebate for the assessment year 1972-73. The assessee claimed development rebate for machinery purchased during the accounting period relevant to the assessment year 1971-72, where the sales tax liability of Rs. 15,103 crystallized in the subsequent accounting period relevant to the assessment year 1972-73. The Income-tax Officer initially rejected the claim, questioning the liability for sales tax and the timing of machinery installation. The Appellate Assistant Commissioner ruled in favor of the assessee, allowing the development rebate for the assessment year 1972-73, subject to verification of necessary conditions.

The Department appealed this decision, leading to the Tribunal's intervention. The Tribunal emphasized that the liability to pay sales tax arises upon completion of the sale or purchase transaction, regardless of uncertainties regarding exemptions. It concluded that development rebate should be claimed in the assessment year of machinery purchase. Consequently, the Tribunal reversed the Appellate Assistant Commissioner's order, prompting the assessee to seek a reference to the High Court.

The High Court concurred with the Tribunal's reasoning, asserting that the liability for sales tax materialized in the earlier accounting period, justifying the claim for development rebate in the assessment year 1971-72. The judgment favored the Revenue, denying the development rebate for the assessment year 1972-73. However, the Court advised the Commissioner to consider the assessee's application under section 154 for granting development rebate if permissible under the law, emphasizing fairness over technicalities.

In conclusion, the High Court dismissed the reference, highlighting the importance of fair treatment towards the assessee in granting development rebate and urged the Commissioner to consider such applications without undue technicality.