Development rebate on plant and machinery. - Income Tax - 368/CBDT

INSTRUCTION NO. 368/CBDT Dated: January 3, 1972 Section(s) Referred: 155(5) Statute: Income - Tax Act, 1961 Reference is invited to Board's Instruction No. 225 (F.No. 202/39/70-ITA II) dated 30th September, 1970 on the above subject and to say that another case has come to the notice of the Board where the claim of a company for development rebate relating to assessment year 1964-65 had originally been disallowed by the Income-tax Officer. The assessee went in appeal before the Appellate Assistant Commissioner who directed the Income-tax Officer to verify the claim and allow it in accordance with law. The Income-tax officer made the necessary verifications and allow the development rebate by an order dated 22nd September, 1969 in pursuance of the directions of the Appellate Assistant Commissioner. The Machinery and plant had however, been sold by the assessee during the previous year relevant to the assessment year 1968-69. The Income-tax Officer who made the assessment for the assessment year 1968-69, had been transferred and effect to the Appellate order for the assessment year 1964-65 was given by another Income-tax Officer who was not aware of the fact that the machinery and plant on which development rebate was being allowed in pursuance of the directions of the Appellate Assistant Commissioner, had in the meanwhile been sold within the period of eight years. 2. The Board therefore desire that whenever Income-tax Officer finds on the examination of the balance sheet of a particular year that any machinery or plant has been sold during the year, he should also verify whether development rebate had been allowed in such machinery and plant in any earlier year. If such machinery or plant has been sold or otherwise transferred within eight years of its acquisition, the Income-tax Officer should immediately initiate action for withdrawing the development rebate already allowed. In case the claim for development rebate in respect of the earlier year has been disallowed and the matter is pending in appeal or revision, the Income-tax Officer should either bring the fact of sale of the machinery to the notice of the Appellate or Revision authority or made a note in the order sheet of the relevant assessment year that in the event of the claim of the assessee being admitted in appeal or revision the development rebate should be withdrawn u/s 155(5) of the Income-tax Act. These instructions may please be brought to the notice of the Income-tax Officers working in the charge.