9911796707
TMI Blog1981 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... in para. I of the statement of the case ? (2) Whether clause (i) of Explanation I to section 10(2)(vib) of the Indian Income-tax Act, 1922, prohibits the sale of machinery in respect of which development rebate is allowed even when the machinery was installed prior to 1st January, 1956 ? " The assessee-company had, in its return for the assessment year 1958- 59, claimed development rebate in respect of certain machineries as under: ------------------------------------------------------------------------------------------------------------------------------------------- Machinery Cost of Development Year in which installed machinery rebate the machinery in the installed allowed was sold month of ----------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not pursue the said line of action any further. Thereafter, with a view to withdraw the development rebate already granted to the assessee-company for the said assessment year 1958-59, the ITO adopted proceedings under s. 147(a) of the I.T. Act, 1961. According to the ITO, by reason of the amendment of s. 10(2)(vib) of the Indian I.T. Act, 1922, by the Finance Act of 1958, and the insertion of s. 35(l1) therein, providing that when the assets, that is, the machineries, were sold within ten years from the end of the year in which they were installed, the development rebate originally allowed was to be deemed to have been wrongly allowed and, therefore, the total income for the relevant year became recomputable. The ITO, accordingly, wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of s. 147(a) of the I.T. Act, 1961, to the facts of this case. The Tribunal observed that when the ITO allowed the development rebate on the facts known to him and when the assessee forfeited its rights to the same by a subsequent sale, it would not be a question of income escaping assessment as a result of the assessee's omission or failure to wholly or truly disclose all the material relevant to the assessment. According to the Tribunal, therefore, s. 147(a) was not attracted. In view of that position, a specific remedy to withdraw the rebate was provided for under s. 35(l 1) of the Indian I.T. Act, 1922. The Tribunal, therefore, held that s. 147(a) was not attracted to the present case and the reassessment made with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ITO can act under the said provisions only if he had reason to believe that some income of the assessee had escaped assessment by reason of an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The question, therefore, in this case is whether, on the facts and circumstances of the case, it could be said that the assessee had omitted or failed to disclose fully and truly all the material facts necessary for an assessment of tax for the year in question. In this case, the assessment year is 1958-59, with the accounting year ending on 31st December, 1957. As shown above, all the four concerned machineries were installed between March, 1957, and D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the year in which the machinery was installed. Under the provisions of s. 35(l1), the rebate already allowed was to be deemed to have been wrongly allowed and the ITO was given the power to recompute the total income of the assessee for the relevant year as if it were a rectification of a mistake apparent from the record, and the period of limitation of four years for the rectification under s. 35(11) was to be computed from the end of the year in which the transfer took place. However, that would be the case only if the said provisions were held applicable to the machineries installed before 1st January, 1958, as in this case. In the view that we are taking on the first question, however, we do not think it necessary to express our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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