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TMI Blog1994 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... e of withdrawing the development rebate granted for the year 1969-70 ?" This reference pertains to the assessment year 1969-70. The material facts of the case are as under: The assessee owned a plant known as PAN plant the value of which was Rs. 1,81,54,060. This plant also comprised a PAN-reactor the value of which was Rs. 15,60,408. This PAN-reactor was destroyed by fire in the year 1973 relevant to the assessment year 1974-75. The assessee received compensation for the loss from the United Fire and General Insurance Company. In the assessment for the assessment year 1969-70, the assessee had been allowed development rebate under section 33 of the Income-tax Act, 1961, at the rate of 33 per cent. on the cost of the PAN plant amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself had been destroyed by fire and the payment by the insurance company was compensation for the loss and not on account of any transfer of any assets by the assessee to the insurance company. Aggrieved by the order of the Tribunal, the Revenue sought for reference to this court and accordingly the Tribunal has referred the question set out above for our opinion. We have carefully considered section 34(3)(b) of the Act which provides that 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 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be withdrawn if the machinery is "sold or otherwise transferred by the assessee to any person" within the stipulated period. The only question that arises for consideration is whether destruction of an asset by fire and payment of compensation by the insurance company on account thereof to the assessee can be termed as "transfer" within the meaning of section 34(3)(b) of the Act. The answer, in our opinion, has to be in the negative. Because till the destruction took place, the machinery was owned by the assessee. Once it was destroyed by fire, no machinery was available which could be transferred by the assessee to any third party. In such a situation, it is difficult to accept that the destruction of machinery amounted to transfer there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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