9911796707
TMI Blog1970 (5) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd., the present petitioner, at the value shown in the books of Venesta while the petitioner undertook to meet all the liabilities of Venesta incurred on account of its Indian business including a loan of pound 204,328 due by Venesta to Messrs. Reynolds T. I. Aluminium Ltd. It was further agreed that after setting off the liabilities from the aforesaid book value of the assets the residue of the consideration for the said sale would be paid and satisfied by the issue to Venesta or its nominees of 998 shares of pound 1 each credited as fully paid in the petitioner-company. As a result Venesta held all the 1,000 shares constituting the authorised capital of the petitioner-company and the petitioner-company became a hundred per cent. subsidiary of Venesta. The petitioner closed its accounts for the first time on the 30th November, 1961, and filed its return for the assessment year 1962-63 (the accounting period being from 1st January, 1961, to 30th November, 1961) and in the said return claimed depreciation on the basis of the written down value of the fixed assets as determined in the previous assessment of Venesta. Subsequently, by a letter dated the 3rd December, 1962, Messrs. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order or refund order must be confined to a mistake which is apparent from the record. The courts in this country including the Supreme Court has had to consider what is meant by the expression " apparent from the record " as used in these sections and it is now well-settled that the mistake contemplated is not one which is to be discovered as a result of an argument or on which two opposite views might be possible. It must be an error which is apparent and in regard to which no argument is called for. Dr. Pal for the petitioner submitted that when assets are acquired in exchange for fully paid up shares, what is the exact amount of the consideration paid for such acquisition is always a very difficult question for determination. The face or par value of the shares is not the only criterion to be taken into consideration. If as the result of such a transfer the transferee-company acquires assets which is in excess of the par value of the shares paid for such acquisition, then the excess is to be credited to the capital reserve account or share premium account. It could not be said that the assets have been acquired at only the par value of the shares. Dr. Pal referred me to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which cannot be decided off-hand. Mr. S. C. Sen, the learned counsel for the department, contended that the question of ascertaining the actual cost was always a question of fact and the Income-tax Officer is entitled to determine such actual cost according to his own valuation and for this proposition he relied on a recent decision of this court in the case of Jogta Coal Co. Ltd. v. Commissioner of Income-tax. But, in that case what was held by this court was that the Income-tax Officer was not bound to accept the figure given in a contract or conveyance and if he is of opinion that a fictitious price has been put on such assets it was open to him to refuse to accept that price, go behind the contract and ascertain what the original cost was. I do not think that that case supports the contention of Mr. Sen that in any event the Income-tax Officer is entitled to determine the actual cost of the assets of the assessee irrespective of other considerations. Recently, I have had occasion to consider this very question in Narsingdas Bangur v. Income-tax Officer, Central Circle I, Calcutta, in Matter No. 739 of 1967. In that case the question was whether the tax credit given to a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not a statutory notice but is merely intended to give the assessee an opportunity of being heard before any order is passed to his detriment. As the Income-tax Officer's jurisdiction does not depend on such a notice, no writ could be issued for quashing a notice under section 154 and as such the present proceedings are misconceived. In support of his contention Mr. Sen referred me to a decision of the Supreme Court in Maharana Mills (Private) Ltd. v. Income-tax Officer, Porbandar, where in respect of an exactly similar provision in section 35 of the Indian Income-tax Act, 1922, the following observations were made at page 355 : " The object of the provision as to notice in the second sub-section of section 35 is that no order should be passed to the detriment of an assessee without affording him an opportunity but it cannot be said that the rule is so rigid that if, as a matter of fact, the assessee knows of the proceedings and the matter has been discussed with him then an adverse order would be invalid merely because no notice under section 63 was given. Of course this postulates that the reasonable opportunity has been given to show cause. Secondly, this provision is applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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