9911796707
TMI Blog1996 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as "the Act"). The Revenue required the Income-tax Appellate Tribunal, Allahabad Bench, to refer the following question of law under section 256(1) of the Act for the decision of the High Court : "Whether the Tribunal was in law justified in holding that the amendment order made by the Income-tax Officer was not sustainable to the extent to which it purported to withdraw development rebate admissible to the assessee in respect of that part of the machinery/plant which was the subject-matter of the hiring agreement dated August 27, 1969." (emphasis supplied). The Appellate Tribunal rejected the said application by order dated October 20, 1976. It is, thereafter that the Revenue filed the application under section 256(2) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision rendered for the assessment year 1970-71 and held that no transfer was involved by the lease agreement and so section 34(3)(b) of the Act was not attracted. The appeal filed by the assessee was allowed. Thereafter, the Revenue required the Appellate Tribunal in R. A. No. 131 of 1976-77, to refer the question of law formulated hereinabove for the decision of the High Court. The Tribunal declined the request of the Revenue and the application filed by the Revenue before the High Court also met with the same fate. It necessitated the Revenue to approach this court by special leave. After obtaining special leave in Special Leave Petition (Civil) No. 3204 of 1977, the above appeal has been filed. We heard counsel. The original assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired and installed and so the allowance made under section 33 of the Act, in respect of the machinery or plant, should be deemed to have been wrongly made for the purpose of the Act. Counsel for the assessee, Smt. S. Janani, submitted that section 34(3)(b) of the Act should be read along with the definition contained in section 2(47) of the Act, and so read, this is not a case of any "sale" or "transfer otherwise" extinguishing the rights of the assessee in the machinery or plant. It will be useful to bear in mind the relevant statutory provisions [section 2(47), section 33 and section 34(3)(b)] applicable to the instant case : "Section 2(47).--['transfer', in relation to a capital asset, includes,-- (i) the sale, exchange or relinq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, a sum by way of development rebate as specified in clause (b)." " 34. (3)(b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act. and the provisions of sub-section (5) of section 155 shall apply accordingly : Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery, but also its exclusive user by the assessee for the purpose of his business, that is essential to enable the assessee to get development rebate under section 33(1)(a). In cases where an assessee disables himself from such continued exclusive user of the plant or machinery for the purpose of his business for the specified period, the consequences specified in section 34(3)(b) will follow, provided the machinery or plant is "otherwise transferred". It is true that there is no sale ; nor is there any complete extinguishment of the right of the assessee in the machinery or plant by the grant of lease ; but the exclusive possession and enjoyment of the machinery or plant by the assessee no longer exists or survives. Such right to exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred" by the assessee to another person. In the above view of the matter, we are of the view that the withdrawal of the development rebate by the Income-tax Officer in the amendment order dated March 30, 1970, by relying on section 34(3)(b) of the Act is justified. We are broadly in agreement with the decision of the Kerala High Court reported in Blue Bay Fisheries (P.) Ltd. v. CIT [1987] 166 ITR 1, in the interpretation of the crucial words occurring in section 34(3)(b) of the Act, "otherwise transferred". We set aside the decision of the Allahabad High Court and also of the Appellate Tribunal and answer the question formulated by the Revenue under section 256(1) of the Act in the negative, in favour of the Revenue and against the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
