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TMI Blog1978 (3) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... n., 1968. 4. During the course of the assessment proceedings for the asst. yr. 1969-70, the ITO examined the question as to whether the assessee company can be said to be manufacturer of "Petro Chemicals" and held that it was actually manufacturing petro chemicals and as such it was entitled to development rebate of Rs. 3,16,40,713 which had been calculated at 35 per cent on the total value of plant and machinery of Rs. 9,04,02,038 (value as per return Rs. 9,25,00,818 minus expenditure disallowed for capitalisation of Rs. 70,98,700). It was also mentioned by the ITO that development rebate was allowed at 35 per cent as the product (petro chemicals) manufactured is one specified in the list in Fifth Schedule to the IT Act, 1961. So the ITO held that the amount of development rebate of Rs. 3,16,40,713 was to be carried forward and would be allowed as a deduction in subsequent years when the assessee had assessable income and the assessee satisfied the conditions regarding creation of relevant reserves etc. 5. So far as the asst. yr. 1970-71 is concerned, the ITO observed that the assessee company had not created any development rebate reserve as required by s.34(3A) and in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petition filed by the assessee. It also appears that the assessee had thereupon preferred an appeal to the Tribunal being ITA No. 870 (Bom)/1977-78 and the same has also been dismissed by us by our order of even date on the ground that the appeal does not survive. 8. So far as the asst. yr. 1969-70 is concerned, the assessee had preferred an appeal to the AAC agitating as many as 9 grounds on different points as the ITO had already held the assessee to be a manufacturer of petrochemicals. So the question as to whether the assessee company was a manufacturer of petro chemicals or not was not actually before the A.A.C, as the same had been decided in favour of the assessee. 9. So far as the asst. yr. 1970-71 is concerned the assessee had filed an appeal agitating 15 grounds including ground No. 5 for not allowing development rebate amounting to Rs. 9,40,706 on additions to plant and machinery made during the year on the ground that the assessee had not created any development rebate reserve as required by s.34(3A) of the Act. 10. So, far as the asst. yrs. 1971-72 and 1972-73 are concerned, the assessee had raised as many as 15 and 20 grounds respectively. 11. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was urged that we should expunge the observations of the AAC and direct the ITO to decide the matter afresh with an open mind and ignoring guidelines laid down by the AAC and after giving full opportunity to the assessee. So far as asst. yr. 1969-70 is concerned, it was urged that the AAC had no jurisdiction to deal with the question as to whether the assessee company was manufacturer of petro chemicals or not as the said question had been finally concluded by the decision of the High Court in the writ petition whereby the High Court had quashed the rectification order under 2.154 of the Act and the ITO had actually given effect to the High Court's order and as such this issue had been concluded by the decision of the Bombay High Court and the AAC had acted without jurisdiction in directing the ITO to consider this issue for the asst. yr. 1969-70 also alongwith the remaining years. 13. We have heard the rival submissions of both the sides and as we are in full agreement with the learned counsel for the assessee that the AAC had acted without jurisdiction in setting aside the whole assessments and not dealing with other grounds unconnected with the question as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the rectification order dt. 17th Feb., 1973 by its order dt 25th April, 1973 and the ITO had actually given effect to the High Court's order by his order dt. 17th Jan., 1977. So the original order of the ITO allowing carry forward of development rebate held the field as it had become finally concluded by the High Court's decision in which the ITO had held the company as the manufacturer of petro chemicals in the assessment year. Moreover it will be noted that the assessee had not filed any appeal on this ground before the AAC for the asst. yr. 1969-70 though it had filed an appeal on other points. In view of this state of record, it was not open to the AAC to have re-opened the question as to whether the assessee company was a manufacturer of petro chemicals or not as the same question was not agitated before him by the assessee and the said question had become concluded by the High Court's decision. So the AAC while directing the ITO to consider the question as to whether the assessee company was a manufacturer of petro chemicals or not for the asst. yr. 1969-70 had acted without jurisdiction in directing the ITO to go into the question regarding the character of the product ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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