1981 (1) TMI 91 - AT - Income Tax

Summary

Issues:
1. Cancelling of ITO's orders under s. 154 for the assessment years 1967-68, 1969-70, and 1973-74.
2. Interpretation of the provisions of s. 33(4) regarding the withdrawal of development rebate from the assessee firm.
3. Whether there was a transfer involved when one partner of the firm takes over the assets of the business upon dissolution.
4. Applicability of the Supreme Court decision in Malabar Fisheries Co. case to the present case.
5. Consideration of provisions of s. 34(3)(b) and s. 33(3) in relation to the concept of transfer.

Detailed Analysis:
1. The appeals before the Appellate Tribunal ITAT Amritsar involved the cancellation of the ITO's orders under s. 154 for the assessment years 1967-68, 1969-70, and 1973-74. The Revenue was aggrieved by the CIT (A)'s combined order canceling the ITO's orders withdrawing the development rebate allowed to the assessee firm. The Tribunal considered all three appeals together and concluded that the CIT (A)'s decision was correct, even though not well-reasoned.

2. The Tribunal noted that the ITO issued fresh notices for rectification for the three assessment years based on the provisions of s. 33(4). The Tribunal found that there were conceivably two views possible on the issue of withdrawal of development rebate from the assessee firm. The arguments presented by the assessee, citing Supreme Court decisions, raised debatable issues that would prevent the ITO from withdrawing the development rebate under s. 154 r/w s. 155(5) for the three assessment years under appeal.

3. The Tribunal further emphasized the Supreme Court decision in the Malabar Fisheries case, which considered provisions similar to s. 33(4). The Supreme Court's interpretation of the concept of transfer in the context of the IT Act was deemed applicable to the present case. The Tribunal highlighted that the Revenue was not entitled to withdraw the development rebate already allowed to the assessee firm for the relevant assessment years based on the Supreme Court's decision.

4. Ultimately, the Tribunal dismissed the appeals of the Revenue, upholding the CIT (A)'s decision to cancel the ITO's orders under s. 154. The Tribunal's decision was based on the interpretation of relevant provisions, Supreme Court decisions, and the conclusion that the Revenue was not justified in withdrawing the development rebate from the assessee firm.