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TMI Blog1983 (12) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... fter disregarding reduction of an amount of Rs. 61,467 which was part of that amount which the assessee deducted from the value of various assets before claiming depreciation. 3. We will set out certain facts leading to the above contentions. In this case, the ITO made the assessment originally on 28-2-1978. Against loss returned of Rs. 4,81,960 the loss determined was Rs. 4,42,720. In making this assessment depreciation was allowed to the extent of Rs. 1,67,164. The balance sheet filed as on 31-3-1976 before the ITO showed on the liability side: "Reserve for development of the industry Rs. Incentive received from the Government of Andhra Pradesh for development of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt charges, etc., to the extent of Rs. 8,921 incurred during the accounting year but debited to the provision account brought forward from the earlier year and, consequently, claimed to have been not deducted in computing the income for the year. For considering these two matters the assessment for 1976-77 is set aside. The appeal for this year will be treated as allowed in part for statistical purposes." The ITO, therefore, passed an order on 29-1-1981 which was described as under: "section 143(3) read with section 253" He allowed relief under section 80J and also allowed as deduction the advertisement charges. The total loss was computed at Rs. 4,99,376 for this year. In this order also there was no reference separately on the point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n take when such an order is passed. There their Lordships posed the question: "Is it open to the Income-tax Officer to treat the earlier assessment as non est and to make a de novo assessment ignoring the previous assessment altogether ?" and answered the same as under: "... the order of the Appellate Assistant Commissioner did not contain a direction that the Income-tax Officer should proceed to make a fresh assessment such as was envisaged under section 31(3)(b) of the Income-tax Act, the order was specific and all that the Appellate Assistant Commissioner directed the Officer to do was to receive a duplicate copy of the application for registration and dispose of it according to law, and therefore it was not open to the Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had become functus officio and if he wanted to revise and amend the order on a direction of the appellate authority he cannot do it any longer under the provisions of section 23 (analogous to section 143). P.B. Mukharji, J. in his separate judgment in the aforesaid case repelled this argument observing as under: "... This argument is based on a fallacy. The Income-tax Officer's duty to assess the total income of the assessee and to determine the sum payable by him on the basis of the return under section 23 of the Act is the whole process of assessment which may end with his order or may be revised by the higher appellate authorities including the Appellate Assistant Commissioner and the Tribunal recognised by the Income-tax Act. If, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner was, therefore, not precluded from revising the order on such ground. As we have already pointed out the findings in the order of 28-2-1978 had not become non est. That order was the subject-matter of appeal to the Commissioner (Appeals). The aspect of the treatment to be adopted of the subsidy received has to be held to have received the consideration of the ITO by implication. This is because apart from the excessive subsidy received in the balance sheet the assessee had included a portion of the subsidy to determine the actual cost of assets on which depreciation was admissible and depreciation was allowed only on the reduced cost. As a matter of fact in passing the order in revision, the Commissioner has directed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the direction of the Commissioner to assess the subsidy as income cannot be upheld because such direction has been given in excess of his jurisdiction. Consequential direction to rework the depreciation would naturally also have to be vacated. The assessee, therefore, succeeds and the appeal has to be treated as allowed and we do so. 10. However, for the sake of completeness, we would bring on record, the submission of the learned counsel of the assessee that were we to decide against the assessee on the aforesaid point, then direction to include the subsidy as taxable income would be in order in view of the latest pronouncement on the point by the Andhra Pradesh High Court. 11. The result is, the appeal is allowed. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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