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TMI Blog1973 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... wance, by way of development rebate, of Rs.44,586 under section 10(2)(vib) of the Indian Income-tax Act, 1922, hereinafter called " the Act ", in respect of buses purchased by it before 31st December, 1957, in the computation of its business income. The Income-tax Officer, however, did not allow this rebate on the ground that all the said buses were sold by the company within eight years from the date of their purchase. When the matter came before the Appellate Assistant Commissioner, it was submitted on behalf of the company that although section 35 (11) of the Act empowered the Income-tax Officer to rectify his order by withdrawing the development rebate in such cases, yet under the law, the rebate should first be allowed under section 10(2)(vib) and then withdrawn under section 35(11) of the Act. The Appellate Assistant Commissioner, however, did not accept this submission and upheld the order of the Income-tax Officer observing that at the time when the Income-tax Officer was making the fresh assessment, he knew that, as the buses had been sold by the company within eight years of their purchase, the development rebate would have to be withdrawn subsequently, and, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade unless- (a) the particulars prescribed for the purpose of clause (vi) have been furnished by the assessee in respect of the ship or machinery or plant; and (b) except where the assessee is a company being a licensee within the meaning of the Electricity (Supply) Act, 1948, or where the ship has been acquired or the machinery or plant has been installed before the 1st day of January, 1958, an amount equal to seventy five per cent. of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account to be utilised by him during a period of ten years next following for the purposes of the business of the undertaking, except- (i) for distribution by way of dividends or profits, or (ii) for remittance outside India as profits or for the creation of any asset outside India, and if any such ship, machinery or plant is sold or otherwise transferred by the assessee to any person other than the Government at any time before the expiry of ten years from the end of the year in which it was acquired or installed, any allowance made under this clause shall be deemed to have been wrongly allowed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd. v. Commissioner of Income-tax, the rebate under this clause is a concession granted to an assessee, but that concession is made subject to the fulfilment of certain requirements. The grant of the allowance is dependent on the compliance of the conditions prescribed in the proviso to this clause. In another ruling of the Supreme Court in Chittoor Motor Transport Co. (P.) Ltd. v. Income-tax Officer, Chittoor, it was said that the legislature had directed the giving of a development rebate on conditions, which were mentioned in clause (vib), one condition being that, if the assessee sold the machinery before the expiry of ten years from the end of the year in which it was acquired to a person other than the Government, he would forfeit such rebate. It is obvious, therefore, that, if the assessee does not comply with the requirements of section 10(2)(vib), he is not entitled to claim development rebate allowance. The arguments addressed to us concerned the last portion of the proviso, the relevant part of which is given below: " and if any such...... machinery..... is sold or otherwise transferred by the assessee to any person other than the Government at any time before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a contingency the Income-tax Officer should in the first instance grant the rebate and then the very next moment withdraw the same by resorting to the provisions of section 35(11) of the Act. The relevant portion of section 35 is: "Rectification of mistake.-(1) The Commissioner or Appellate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under section 33A and the Income-tax Officer may, at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund, as the case may be, and shall within the like period rectify any such mistake which has been brought to his notice by an assessee : .... (11) Where an allowance by way of development rebate has been made wholly or partly to an assessee in respect of a ship, machinery or plant in any year of assessment under clause (vib) of sub-section (2) of section 10, and subsequently at any time before the expiry of ten years from the end of the year in which the ship was acquired or the machi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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