TMI Blog2014 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... rit of Section 154 of the Act, or for that matter, the facility created under Section 32A of the Act - The process of undoing any matter can be only through the known and prescribed procedure and not otherwise – the order is set aside – Decided in favour of Assessee. - I.T.T.A. No. 64 of 2001 - - - Dated:- 25-6-2014 - L. Narasimha Reddy And Challa Kodanda Ram,JJ. For the Petitioner : Sri. A. V. Krishna Kaundinya For the Respondent : Sri. S. R. Ashok JUDGMENT (Per the Honble Sri Justice L. Narasimha Reddy) This appeal is preferred under Section 260A of the Income Tax Act, 1961 (for short the Act) by the assessee-appellant assailing the order, dated 04.05.2000, passed by the Hyderabad Bench A of the Income Tax Appellate Tribunal in I.T.A.No.21/Hyd/1996. The brief facts, that gave rise to the filing of this appeal, are as under: The appellant is a Company, involved in the activity of construction, particularly of Dams. During the assessment year 1983- 84, it claimed the investment allowance under Section 32A of the Act. The Income Tax Officer (ITO), the respondent herein, found the claim to be tenable, and permitted the investment allowance to be absorb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is contrary to law. He contends that the question as to whether the benefit of investment allowance can be availed under Section 32A of the Act, was determined by the competent authority, way back in the year 1983-84, and, in fact, a substantial part thereof was set off over the period and it was not at all open to the respondent to invoke the jurisdiction under Section 154 of the Act. He submits that though in a given case the judgment of the competent Court of law can constitute the basis to initiate proceedings under Section 154 of the Act, it is always subject to certain conditions such as limitation under sub-section (7) thereof, and that the respondent ignored the specific provision. It is also urged that in the name of rectification of error, the respondent has, in fact, reviewed the order passed by his predecessor in the assessment year 1983-84, wherein not only the character of the amount claimed as investment allowance, but also the entitlement to claim set off, were determined. It is pleaded that even on merits, the Commissioner took the view that the judgment of the Supreme Court in N.C.Budhiraja Companys case (supra), does not apply and the same was not properly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. There was no reply from the appellant and an order was passed on 24.01.1994. The basis for the proceedings indicated in para 2 of the order is as under: In the light of recent Supreme Courts Judgment in CIT v. N.C.Budharaja Co. and another in 204 ITR 413 superseding all the earlier orders wherein the Supreme Court held that the construction work cannot be treated as a manufacturing activity, a notice under Section 154 was issued to the assessee company to withdraw the investment allowance. So far, to this date the assessee neither filed any explanations nor sought for adjournment. Therefore, I am compelled to complete the proceedings keeping in view the facts of the case and Supreme Courts judgment. The conclusion of the respondent reads: Therefore, in the instant case, since the assessee company is not engaged in manufacture of articles or thing it cannot be treated as industry for the purpose of investment allowance u/s.32A. As such, the assessee- company is not entitled to investment allowance in respect of Plant Machinery used by it for construction activity of Dam etc. hence, the unabsorbed investment allowance allowed in the assessment year 1991-92 is with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised subject, however, to the restrictions. One such restriction is imposed under sub-section (4) thereof, is that the power shall not be exercised after expiry of four years from the end of the financial year, in which the order sought to be amended, was passed. If one takes into account, the date of order, which the respondent intended to rectify, the exercise can be said to be within the limitation stipulated under sub-section (7) of Section 154 of the Act. However, on a close analysis, it emerges that the respondent has in effect, revised and modified the determination made by his predecessor, in the assessment year 1983-84, as regards character of the investment allowance claimed by the appellant. That the character so decided has been acted upon, is evident from the fact that not only part of it was permitted to be adjusted during that very assessment year, but also substantial part of it was allowed to be carried forward and adjusted in the subsequent years. Though the respondent has chosen to brand the exercise undertaken by him as the one, to correct mistake, in effect it is nothing but one of revising the order passed by the ITO in the assessment year 1983-84. Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim the benefit of the business loss arose on the next assessment year. When the claim was pressed, the ITO, who processed the return for the subsequent year, expressed his inability and treated the observation as final. The matter ultimately landed before the Supreme Court. The Honble Supreme Court framed the following questions in this behalf: 1. Whether on a true interpretation of the deed of agreement dated 2nd January, 1931, appointing the assessee as treasurer of the Allahabad Bank Limited, income earned by the assessee from his activities as such treasurer fell to be computed under Section 10 of the Act or Section 7 or Section 12 of the Income-tax Act? 2. Whether the assessee could claim a set-off of the loss suffered by him in the preceding year 1950-51 against his profits in the year under consideration, i.e., 1951-52, having failed to prefer an appeal against the refusal by the Income-tax Officer making the assessment for the year 1950-51 to allow the assessee to carry forward the loss under Section 24(2) of the Act? Their Lordships took the view that it was not competent for the ITO, who processed the return for the assessment year 1950-51, to make an obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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