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TMI Blog1974 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... s revised under section 34 of the Indian Income-tax Act, 1922, determining the assessee's total income as Rs. 4,18,59,438. While making the assessment, the Income-tax Officer had allowed development rebate of Rs. 2,21,48,873 against the development rebate reserve of Rs. 1,66,57,25 1. Similarly, for the assessment year 1962-63, the total income as per the original assessment was rectified under section 154 of 1961 Act and revised under section 250 determining the assessee's total income at Rs. 8,20,77,760. In this case also while making the assessment the Income-tax Officer had allowed development rebate of Rs. 28,79,361 against the creation of additional statutory reserve during this year to the extent of Rs. 21,57,039. In the course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a portion of the development rebate reserve had found its way to the credit balance of profit and loss account which was ultimately used for declaration of dividend. This, according to the Income-tax Officer, constituted contravention of statutory provision which led him to believe that income chargeable to tax had escaped assessment. Thereafter, the assessee appealed against the above assessment orders. The Appellate Assistant Commissioner held that there was no basis or jurisdiction for the income-tax Officer to re-open the assessments. According to him, the Income-tax Officer had no information in his possession which had given him jurisdiction to invoke the provisions of section 147(b). The Appellate Assistant Commissioner, accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 34 of the Indian Income-tax Act, in respect of the previoas year in which the ship was acquired or the machinery or plant was installed, if the ship, machinery or plant was first put to use in the immediately succeeding previous year. .Section 34(3) stipulates that the deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent. of the development rebate to be actually allowed was debited to the profit and loss account of the relevant previous year and credited to the reserve account, to be utilised by, the assessee during a period of eight years, next following, for the purpose of the business of the undertaking, other than, (i) for distribution by way of dividends or profits ; or (ii) for rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of dividends or profits ; or (b) for remittance outside India as profits or for the creation of any asset outside India ; or (c) for any other purpose which is not a purpose of the business of the undertaking ; the development rebate originally allowed shall be deemed to have been wrongly allowed, and the Income-tax Officer may, notwithstanding anything contained in this Act, recompute the total income of the assessee for the relevant previous year and make the necessary amendment ; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the sale or transfer took place or the money was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 8 succeeding years for the purpose of the business of the undertaking other than, (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. It was undisputed before the Tribunal that payment of loan incurred to the World Bank and/or to the Government was one for the business and it was a user of money for the purpose of the undertaking of the assessee. These amounts were not paid also for distribution of dividends or for remittance of profits outside India. But counsel for the revenue contended that the reserve account or the expression " reserve " was well-known in the company's jurisprudence and it should be taken that the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of meeting World Bank loan as well as Government loan. It is also true that normally a reserve must be for an unspecified liability or unknown liability but in this case we are dealing with the question of a reserve account which is supposed to be used for the purpose of business of the undertaking and that reserve account is prohibited from being used for payment of dividends or remittance of profits outside India. In this context, it is doubtful, whether the expression " reserve account " should be construed as reserve for an unspecified contingency, as in the other cases. As mentioned before, we are concerned with the withdrawal of the development rebate already allowed and that withdrawal is dependent on the happening of the two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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