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Issues Involved:
1. Dismissal of the petitioner's revision application by the Commissioner of Income-tax on the ground of limitation. 2. Treatment of expenditure incurred in connection with the issue of debentures as capital expenditure instead of revenue expenditure in the original assessments. Issue-wise Detailed Analysis: 1. Dismissal of the petitioner's revision application by the Commissioner of Income-tax on the ground of limitation: The petitioner, a private limited company, sought a writ of certiorari to set aside the order passed by the Commissioner of Income-tax on January 29, 1970, which dismissed the petitioner's revision application under section 33A of the Indian Income-tax Act of 1922 and section 264(1) of the Income-tax Act of 1961 due to limitation. The petitioner argued that the Supreme Court's decision in India Cements Ltd. v. Commissioner of Income-tax, delivered in 1966, reversed the earlier view of various High Courts, thereby changing the legal position regarding the deductibility of expenses incurred in connection with the issue of debentures. The petitioner filed a revision application on April 26, 1966, after becoming aware of the Supreme Court's decision. The Commissioner issued a show-cause notice on October 7, 1968, asking why the revision application should not be dismissed as time-barred. Despite the petitioner's explanation that the Supreme Court's decision constituted a sufficient cause for the delay, the Commissioner refused to condone the delay, stating that the change in the legal position was not a valid ground for condonation. The court found that the Commissioner had the power to condone the delay if the assessee was prevented by sufficient cause from filing the application within the prescribed time. The court held that the petitioner had no cause to claim a refund before the Supreme Court's decision, as the legal position was settled by various High Courts treating such expenditure as capital expenditure. The Supreme Court's decision in India Cements Ltd. changed the legal situation, providing the petitioner with a valid ground to file the revision application. The court concluded that the Commissioner was wrong in holding that the change in legal position was not a valid ground for condoning the delay and that the petitioner had shown sufficient cause for the delay. The court set aside the Commissioner's order, condoned the delay, and directed the Commissioner to dispose of the revision applications on merits. 2. Treatment of expenditure incurred in connection with the issue of debentures as capital expenditure instead of revenue expenditure in the original assessments: The petitioner contended that the original assessments for the assessment years 1961-62, 1962-63, and 1963-64 contained an apparent error of law, as the expenditure incurred in connection with the issue of debentures was treated as capital expenditure instead of revenue expenditure. The petitioner argued that the Supreme Court's decision in India Cements Ltd. rendered the assessments illegal from the inception, as the expenditure should have been treated as revenue expenditure. The petitioner claimed that this mistake of law, common to both parties, warranted the application of section 72 of the Indian Contract Act, which provides for the refund of tax recovered under a mistake of law. The court noted that the petitioner did not claim the expenditure as revenue expenditure in its returns, and the assessing officer had no occasion to consider the merits of the claim. The court also observed that the petitioner had not pursued further remedies by way of appeal. Given that the court had already decided in favor of the petitioner on the first issue and directed the Commissioner to proceed with the revision applications, it deemed it unnecessary to express an opinion on the second issue. The court allowed the writ application, set aside the Commissioner's order, condoned the delay, and directed the Commissioner to dispose of the revision applications on merits. Conclusion: The court allowed the writ application, set aside the Commissioner's order dated January 29, 1970, condoned the delay in filing the revision applications, and directed the Commissioner to proceed further and dispose of the revision applications on merits. The rule was made absolute with costs.
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