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TMI Blog1976 (10) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1968-69 ? 2. Whether the Appellate Tribunal is correct in holding that subsequent correction of the company's account would meet the requirement of the statutory provision for the assessment year 1968-69 ?" For the assessment year 1968-69, corresponding to the accounting period ending 31st October, 1967, the assessee made a total claim for development rebate of Rs. 72,507. The said amount was made up of two items: Rs. (1) Development rebate on gas cylinders of the value of Rs. 1,18,389 installed during the year 23,678 (2) Development rebate on other machinery of the value of Rs. 2,44,145 installed during the year 48,829 ------------- Total 72,507 ------------- For making the claim for developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeting having adopted the accounts on April 29, 1968, it was not open to the directors to tamper with those accounts on July 23, 1968, and that the accounts as adopted by the annual general meeting of the company not having created the required reserve, the assessee was not entitled to the entirety of the development rebate claimed by it. It is under these circumstances that the Income-tax Officer rejected the claim for development rebate of the entire amount. The assessee preferred an appeal against the above order of the Income-tax Officer and during the pendency of the appeal, the annual general meeting of the company which took place on April 26, 1969, ratified the amendments to the accounts made by the board of directors on July 23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as the rectification orders contemplated by section 154 and section 254(2) of the Act. In this view, it allowed the appeal preferred by the assessee. It is the correctness of this conclusion of the Tribunal that is challenged before us by the Commissioner of Income-tax in the form of the two questions extracted already. Before we go into the point raised, it is necessary to refer to the actual statutory provisions. Section 33 of the Act provides for allowance of development rebate. Sub-section (1)(a) of that section states that in respect of a new ship or new machinery or plant which is owned by the assessee and is wholly used for the purposes of the business carried on by him, there shall, in accordance with and subject to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of development rebate. This follows simply from the clear and categorical language contained in section 34(3)(a) of the Act. In this particular case, as we have pointed out already, the accounts as adopted by the annual general meeting of the company for the relevant year on April 29, 1968, had not created a reserve as contemplated by section 34(3)(a) of the Act, but had created a reserve only for a smaller amount. It is in view of this only that the Appellate Assistant Commissioner allowed development rebate to the extent that the reserve actually created would sustain the claim and did not allow the claim of the assessee in its entirety. It was only after the assessment was completed by the Income-tax Officer that the annual gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors. As a matter of fact, that the board of directors cannot modify such accounts is not in dispute before us and all that was contended before us was that the company at the subsequent annual general meeting held on April 26, 1969, had ratified the action taken by the board of directors on July 23, 1968, and that the effect of such ratification was that the company had amended its accounts from the very beginning, namely, when it originally adopted the accounts on April 29, 1968. We are unable to accept this argument, at any rate, for the purpose of the claim for development rebate. We are clearly of the opinion that having regard to the language of section 34(3)(a) of the Act, the necessary reserve as contemplated by the statute shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that any amendment of the accounts or creation of the reserve subsequent to the order of the Income-tax Officer will not be of any avail so long as the necessary reserve was not properly, validly and legally created at the time when the Income-tax Officer disposed of the matter and that no change made subsequently will have the effect of rendering the order of the Income-tax Officer erroneous so as to enable the appellate authority to interfere with that order on that ground. In view of this conclusion of ours, as a result of the construction of the relevant statutory provisions, it is needless to refer to the various decisions cited before us. Under these circumstances, we answer the questions referred to us in the negative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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