1982 (8) TMI 89 - AT - Income Tax

Summary

Issues Involved:
1. Maintainability of the appeal against the ITO's order.
2. Inclusion of capital work-in-progress in the capital employed for relief under Section 80J.
3. Reduction of written down value of assets entitled to depreciation and extra shift allowance.
4. Impact of subsequent judicial decisions on the fresh assessment order.

Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue in the appeal was whether the Commissioner of Income Tax (Appeals) [Commr. (A)] erred in rejecting the appeal as not maintainable. The ITO's original assessment was revised under Section 263 by the Commissioner (Commr.), who directed a fresh assessment. The assessee contended that the fresh order passed by the ITO should be considered under Section 143(3) and thus appealable. The Tribunal, however, held that the fresh order passed by the ITO was in compliance with the Commr.'s directions and not an independent assessment. Therefore, the appeal against the ITO's order was not maintainable as it merely gave effect to the Commr.'s findings, which had become final due to the lack of an effective appeal by the assessee.

2. Inclusion of Capital Work-in-Progress:
The assessee argued that capital work-in-progress should be included in the capital employed for the purpose of computing relief under Section 80J, citing the Bombay High Court's ruling in CIT vs. Alcock Ashdown & Co. Ltd. The ITO, following the Commr.'s directions, excluded the value of capital work-in-progress from the capital employed. The Tribunal upheld the ITO's action, noting that the Commr. had recorded a clear finding against the inclusion of capital work-in-progress, which had become final and could not be challenged in the appeal against the fresh assessment order.

3. Reduction of Written Down Value:
The ITO, in compliance with the Commr.'s order, reduced the written down value of assets entitled to depreciation and extra shift allowance by the amount of extra shift allowance allowed in the past. The Tribunal found that the Commr. had recorded a definite finding on this issue, which had become final. Therefore, the ITO's action in reducing the written down value was upheld, and the assessee's appeal on this ground was not maintainable.

4. Impact of Subsequent Judicial Decisions:
The assessee contended that the ITO should have considered the Bombay High Court's decision in CIT vs. Alcock Ashdown & Co. Ltd., which was delivered after the ITO's fresh order but before the Tribunal's hearing. The Tribunal rejected this contention, noting that the ITO could not have taken notice of a judicial decision that was pronounced after the date of the fresh assessment order. Therefore, the subsequent judicial decision did not impact the validity of the ITO's order.

Conclusion:
The Tribunal concluded that the appeal filed by the assessee was incompetent as it sought to challenge the findings of the Commr., which had already become final. The Tribunal dismissed the appeal, upholding the ITO's order that was passed in compliance with the Commr.'s directions under Section 263.