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Issues involved:
The judgment involves the quashing of an order passed by the Income-tax Officer, Jamnagar regarding a change in the previous year u/s 3 of the Income-tax Act, 1961, specifically focusing on condition No. 2(i) imposed by the Officer. Details of the Judgment: 1. Change in Previous Year and Imposition of Conditions: The petitioner sought to quash the order of the Income-tax Officer, objecting to condition No. 2(i) which restricted deductions for depreciation, investment allowance, and other statutory deductions for a 15-month period. The petitioner based their objections on sections 32 and 32A of the Act. The respondents argued against the relief, citing a delay in raising objections and the petitioner's alleged acceptance of the conditions. 2. Acceptance of Conditions and Severability: The Court found that the petitioner's objection was timely as it was raised in the return filed in 1983, and the alleged acceptance of conditions was not valid based on the acknowledgment letter, which did not signify acceptance. The Court also dismissed the argument that the conditions imposed were inseverable, stating that arbitrary conditions denying lawful deductions deserved to be struck down. 3. Power of Income-tax Officer to Impose Conditions: The respondents contended that the Income-tax Officer had the authority to impose conditions, citing a Supreme Court decision. However, the Court differentiated the present case, emphasizing that arbitrary conditions contradicting the Act should not be upheld. The Court partially allowed the application, quashing the conditions imposed by the Officer in paragraph 2(i) related to deductions, while maintaining the Officer's discretion to examine the petitioner's claim. In conclusion, the Court granted relief to the petitioner by striking down the arbitrary conditions imposed by the Income-tax Officer, emphasizing the importance of upholding lawful deductions and ensuring the Officer's discretion in examining claims.
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