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TMI Blog1982 (7) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... metal used for making lamp filaments and manufacture of sets therefrom. When originally the return declaring income of Rs. 116 was filed by the assessee before the ITO, no claim in respect of investment allowance was made, though during the relevant accounting year the assessee had added machinery to the tune of Rs. 1,01,799. There is no controversy about the fact that the assessee had not made any provision of statutory reserve in the books of account pertaining to the year under consideration. In course of certain enquiries, the relevant books were required to be produced by the assessee to the Assistant Director of Inspection (Intelligence) and the same were impounded which were ultimately sent to the ITO, Roop Nagar, assessing the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment order and the assessee, if at all had any cause of action, it was on the date when he was refused to have access to the books and the assessee was at liberty to have suitable legal remedy on that date. It is this main action of the Commissioner (Appeals) denying the benefit of investment allowance which is disputed, though the assessee has come forward with many grounds which can to some extent be treated as argumentative and in certain respects the same can be in respect of observations of the Commissioner (Appeals). 5. The learned counsel for the assessee, while disputing the action of the Commissioner (Appeals) before us, first of all narrated the facts in detail which are briefly placed above and thereafter highlight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val submissions and careful perusal of records, we are unable to confirm the action of the Commissioner (Appeals). There is no controversy about the following facts : 1. That the assessee purchased new machinery worth Rs. 1,01,799 during the accounting year relevant to the assessment year under consideration. 2. That the assessee, while filing return showing total income of Rs. 116, did not put in its claim in respect of investment allowance. 3. That the assessee had not made any provision for statutory reserve in the books of account nor was it projected in the profit and loss account and balance sheet filed with the original return. 4. That the relevant books of account of the assessee were in the custody of the revenue. 5. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation in para 2 of his order : "In these circumstances, it is clear that the assessee's grievance which forms the subject-matter of ground of appeal No. 3, does not arise out of the assessment order dated 28-3-1980 but arose on 27-3-1980 when the ITO refused permission to the appellant to make any entries in the books of account. If the assessee felt aggrieved by this order of the ITO, he should have taken recourse to suitable legal remedies." 9. In the light of the above facts that the permission sought in the course of the assessment proceedings having been refused on 27-3-1980 and the assessment order having been passed on 28-3-1980, that the revenue, while rejecting assessee's claim, observes that the entries were not made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded. It is, therefore, open to the assessee for claiming the rebate to amend the profit and loss account to create a reserve account as required by section 34(3)(a) before the assessment is completed. This view is further supported by section 139(5) which permits an assessee to file a revised return in case he discovers any omission or any wrong statement in the return originally filed by him. Therefore, in the instant case, the assessee was entitled to deduction on account of development rebate." It will not be out of place to mention that their Lordships of the Madhya Pradesh High Court in the said case, explaining the case of Indian Overseas Bank Ltd. distinguished the same. Coming to the Punjab and Haryana High Court decision in Sard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied. Since such reserve was already created before assessment, we do not think that the ITO had any justification to disallow the same unless there are other conditions which are not satisfied. The condition requiring creation of the reserve is the only condition which, according to authorities, has not been satisfied in this case. Explanation to section 32A(4) no doubt allows the ITO to accept any rectification even in a subsequent year. When it is so, we are unable to appreciate rather the ultra-technical stand of the authorities in claiming that even in the same year such rectification cannot be done in the accounts of the same year once the return is filed and not thereafter. In the case of a firm unlike that of a company, there are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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