2004 (1) TMI 31 - HC - Income Tax

Revision Law applicable - Challenge to the intimations issued under section 143(1)(a) and order passed under section 264 - petitioner on receipt of the orders under section 143(1)(a) filed a revision petition before the Commissioner of Income-tax under section 264 which was rejected by Commissioner - in the light of the Explanation to section 143 having been deleted after the assessment years i.e. with effect from June 1, 1999 it does not take away the vested right of revision in favour of the petitioner. - In the circumstances accepting the contention of the petitioner I deem it proper to set aside the order passed by the Commissioner in so far as rejection of the revision for the assessment years 1998-99 and 1999-2000. - These petitions are allowed in part - The order passed by the second respondent in the revisions for the assessment years 1998-99 and 1999-2000 are set aside. Matter is remitted to respondent for reconsideration on the merits in accordance with law

Summary

Issues:
Challenge to intimations under section 143(1)(a) of the Income-tax Act, 1961 and a common order passed under section 264 of the Income-tax Act for assessment years 1997-98 to 2000-01.

Analysis:
The petitioner, a company engaged in the manufacture of special purpose machinery, filed income tax returns for three consecutive years. The company entered into a sale-cum-lease transaction with a state electricity board to purchase and distribute power. The petitioner purchased machinery from the board and leased it back. The company claimed 100% depreciation on the assets, which was disputed by tax authorities. The matter was taken to the Tribunal, and the lease rentals were accepted for taxation in subsequent years. However, the assessing authorities did not accept the claim for the year 1996-97. The petitioner filed revision petitions under section 264 of the Income-tax Act, challenging the orders received under section 143(1)(a). The Commissioner rejected the revision petitions, leading to the present challenge before the High Court.

The High Court examined the provisions of the Act and the deletion of the Explanation to section 143 by the Finance Act, 1999. The court noted that the revision under section 264 is available for pre-143(1A) proceedings, and there was no evidence to suggest it was unavailable for previous assessment years. Citing relevant judgments, the court emphasized that amendments to the Act after the start of a financial year do not apply to assessments for that year. Therefore, the deletion of the Explanation to section 143 did not eliminate the petitioner's right to revision for the relevant assessment years.

Consequently, the High Court partially allowed the petitions, setting aside the Commissioner's order rejecting the revision for the assessment years 1998-99 and 1999-2000. The matter was remitted for reconsideration on its merits, upholding the finding for the assessment year 2001-2002. No costs were awarded in this decision.