9911796707
TMI Blog1982 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. Since the validity of the reassessment proceedings is not open for our determination, it would be suffice to say that the issues that emanate from these appeals now are with regard to the reassessment proceedings. The reassessment for the assessment year 1975-76 was made on 11-8-1980. According to the ITO, the assessee also owns Bhushan Steel Rolling Mills. Thus, the appellant-company comprised of two units, namely, Bhushan Industrial Co. (P.) Ltd. functioning at 22, Industrial Area, Chandigarh, and Bhushan Steel Rolling Mills, functioning at Industrial Area, Chandigarh. The first unit had been established prior to the second unit. In the first unit, the assessee manufactures railway tracks and parts out of MS rods and bars. In the Bhushan Steel Rolling Mills, which was set up and commenced production with effect from 1-7-1974, the assessee manufactures MS rods, bars and Rats, etc., from billets and ingots of iron. The assessee is not a small scale industrial undertaking within the meaning of Explanation to sub-section (2) of section 32A of the Income-tax Act, 1961 ('the Act') and was, therefore, entitled to investment allowance under section 32A of the Act in the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally or on extension, for furnishing the return of income for the assessment year in respect of which he first becomes entitled to deduction under this clause, furnish to the Income-tax Officer a declaration in writing that the provisions of this clause shall not apply to him, and if he does so, the provisions of this clause shall not apply to him for that assessment year and for every subsequent assessment year ; so, however, that the assessee may, by notice in writing furnished to the Income-tax Officer before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income for any such subsequent assessment year, revoke his declaration and upon such revocation, the provisions of this clause shall apply to the assessee for that subsequent assessment year and for every assessment year thereafter:" [Emphasis supplied.] Clause (vi) was inserted by the Direct Taxes (Amendment) Act, 1974, with effect from 1-4-1975. We have not reproduced in this order the second proviso, etc., as we do not consider it material for the determination of the issue before us. 4. When the assessee file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1976 with effect from 1-4-1976. The relevant portions of this section are as under: "32A. (1) In respect of a ship or an aircraft or machinery or plant specified in sub-section (2), 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 provisions of this section, be allowed a deduction, in respect of the previous year in which the ship or aircraft was acquired or the machinery or plant was installed or, if the ship, aircraft, machinery or plant is first put to use in the immediately succeeding previous year, then, in respect of that previous year, of a sum by way of investment allowance equal to twenty-five per cent of the actual cost of the ship, aircraft, machinery or plant to the assessee : Provided that no deduction shall be allowed under this section in respect of-- (a) any machinery or plant installed in any office premises or any residential accommodation including any accommodation in the nature of a guest house; (b) any office appliances or road transport vehicles; (c) any ship, machinery or plant in respect of which the deduction by way of developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be ascertained and allowed by the ITO and for the assessment year 1977-78, the issue is whether on the facts and in the circumstances of the case, the assessee is entitled to investment allowance under section 32A of the Act. 8. We have heard the parties. The learned counsel for the assessee arguing the appeal for the assessment year 1975-76 contended that the provisions of the statute for allowance of development rebate and initial depreciation, though numbered differently, are in substance pari materia. Therefore, when the ITO while making the original assessment on 26-2-1976 allowed the claim of development rebate of the assessee, he had conceded that the assessee fulfilled the conditions and is manufacturing iron and steel (metal) without which the development rebate could not have been allowed. If the assessee, therefore, made an inadvertent mistake of claiming development rebate instead of claiming initial depreciation for this year, that should not stand in its way, because when the ITO reopens the assessment, the assessee is entitled to project to him the correct position and make an alternative correct claim for an allowance of initial depreciation. For this he called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the assessee is not entitled to initial depreciation at all because it is not manufacturing or producing any article or thing mentioned in Item No. 1 of the Ninth Schedule. The learned departmental representative fortified her submissions with reference to the Calcutta High Court judgment in the case of Indian Steel to which the learned counsel for the assessee had eluded before coming to the contention that two reasonable views on the issue are possible. The learned departmental representative contended that the reasons and the analysis of the provisions of law has been done in an exhaustive manner by the Calcutta High Court and, therefore, that is the view that may be adopted by us. 11. Replying to the contention of the learned counsel for the assessee that the assessee was entitled to make an alternative claim during the course of re-assessment proceedings, the learned departmental representative pointed out to the judgment of the Kerala High Court in the case of CWT v. C. Ravindran [1977] 107 ITR 547. In this judgment, it was contended, it was held by the Court that the Tribunal was not justified in law in holding that at the time of re-assessment under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fifth Schedule. 13. The revenue has cited the authority of the Calcutta High Court in the case of Indian Steel. In this judgment, the Court has considered a catena of cases and held that wire rods are commercial products made out of iron or steel. Even if the technical meaning of iron and steel were to be taken into consideration, they would not include wire rods. It would be seen that before the Calcutta High Court, the issue was entirely different. However, at worse it can be said, insofar as the assessee is concerned, that on the issue, there are two reasonable views possible and we have now a settled law that where two reasonable views are possible in the interpretation of a taxing statute, one that favours the assessee has to be adopted. For this, the learned counsel for the assessee has cited the judgment of the Supreme Court in the case of Naga Hills. This proposition has, therefore, to be accepted in interpreting the claim of the assessee that it is covered by Item No. 1 of the Ninth Schedule. 14. However, the question is whether in the re-assessment proceedings for the year 1975-76 that the ITO initiated, the assessee was entitled to make a claim for the initial depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to the machinery and plant and the sum of Rs. 93,215 was allowable as an expenditure incurred for current repairs. The Court further held that because the Tribunal rejected the assessee's claim for development rebate, it was not bound to disallow the claim of the assessee for allowance of the amount spent, if it was a permissible allowance on another ground. Whether the allowance was admissible under one head or another of sub-section (2) of section 10 of the 1922 Act, the subject-matter for the appeal remained the same. We thus find that if the subject-matter of appeal remains the same, the Tribunal is empowered to entertain an alternative claim of the assessee. However, the issue is whether this claim can be entertained in re-assessment proceedings. 16. It is trite law that if in the re-assessment proceedings under section 147 it is found that the assessee's total income is actually less than the income assessed, the assessee would not be entitled to have the assessment revised downward under this section. If the ITO finds that the re-assessment proceedings result into a refund, he may not grant the same and may drop the proceedings. However, in the present case, we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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