9911796707
TMI Blog1996 (6) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... the income determined as per the order dt. 1st Feb., 1973 is as under : Rs. Rs. Total income after giving effect to the AAC's order 86,60,247 Development rebate set off for the asst. yr. 1962-63 71,53,652 ---------- For the asst. yr. 1963-64 15,06,595 86,60,247 ---------------------------- Nil 3. The ITO subsequently sought to rectify the above order under s. 154 of the Act. The grounds for rectificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the assessee there was no mistake apparent on record warranting application of the provisions contained in s. 154 of the Act. The assessee also contended that there was no shortfall of the development rebate reserve. According to the assessee the reserve to be created from 1961-62 to 1968-69 would be Rs. 1,18,47,851 and the reserve actually created was Rs. 1,39,07,312. Therefore the excess development rebate available was Rs. 20,59,561. Thus as against withdrawal of Rs. 16,00,000 there was excess reserve of Rs. 20,59,561 according to the assessee. 5. But according to the ITO, under s. 34(3) the assessee should have created 75 per cent of the development rebate as reserve which worked out to Rs. 1,00,56,033 up to the asst. yr. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessee as well as the ITO, the AAC ultimately held as under: "From the foregoing discussion it should be clear that the question whether the transfer for payment of dividends took effect out of the appropriations to the development rebate reserve in 1967-68 or any prior year to years is at the very least controversial enough to place the matter outside the ambit of valid rectificatory action under s. 154. Besides and in any event, the impugned revision was made exclusively on the ground that the deduction in respect of unabsorbed development rebate originally allowed in the assessment for 1967-68 was not admissible by reason of the appellant's failure to create reserve under s. 34(3) in the years to which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend was made. Therefore the Tribunal considered that it is not necessary for it to go into the merits of the case in the appeal presented before it. Accordingly the Tribunal confirmed the order passed by the AAC. 10. Before us the learned standing counsel appearing for the Department reiterated the arguments as was advanced before the Tribunal in the matter of exercising jurisdiction under s. 154 of the Act. According to the learned standing counsel, inasmuch as a sum of Rs. 16,00,000 was withdrawn as per the directors' report, dt. 31st Dec., 1967 from the reserve created for the earlier years, the conditions prescribed under s. 34(3)(a) of the Act were infringed. According to the learned standing counsel, because of the withdrawal of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessee, that sum of Rs. 16,00,000 said to have been taken from the earlier years' reserve was immediately adjusted out of the excess profit of Rs. 32,00,000 and in that process a sum of Rs. 20,59,561 still remains in the hands of the assessee as excess profit. Therefore, according to the learned counsel appearing for the assessee actually this sum of Rs. 16,00,000 was not taken out from the earlier years' reserve, in which case there is no ground for exercising jurisdiction under s. 154 of the Act since there was no mistake apparent on record. 12. We have heard both the learned standing counsel appearing for the Department as well as the learned counsel appearing for the assessee. 13. The fact remains tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore according to the Department the development rebate already allowed for the asst. yr. 1967-68 requires to be withdrawn to the extent of Rs. 12,64,961 as this is not covered by the reserve even taking an overall position of the reserve created as claimed by the assessee. 15. According to the Department, the balance in the reserve account to be considered for the purpose of statutory requirements under s. 34(3) is as on 31st Dec., 1966 and not as on 31st Dec., 1967 in view of the directors' report in presenting the accounts for the year ended 31st Dec., 1967. Therefore according to the Department, as per the directors' report, a sum of Rs. 16,00,000 was withdrawn from the earlier years reserve and on account of that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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