1981 (8) TMI 111 - AT - Income Tax

Summary

Issues:
1. Validity of the action of the ITO under section 147(b) of the Income-tax Act, 1961.
2. Taxability of the rubber replantation subsidy received by the assessee.

Issue 1: Validity of the action of the ITO under section 147(b)
The original assessment for the assessment year 1975-76 did not include the rubber replantation subsidy received by the assessee. The ITO later reopened the assessment under section 147(b) based on an audit objection stating that the subsidy should be taxed. The Commissioner (Appeals) held that the ITO had not validly reopened the assessment, considering it a mere change of opinion rather than new information. The department contended that the audit note provided information for reopening the assessment. However, the Tribunal agreed with the Commissioner (Appeals) that the audit note did not constitute valid information under section 147(b) as it was an interpretation of the law and not a judicial pronouncement.

Issue 2: Taxability of the rubber replantation subsidy
The Tribunal referred to previous cases where it was held that rubber replantation subsidy cannot be treated as income for tax purposes. The Tribunal applied this precedent to the current case and held that the rubber replantation subsidy received by the assessee should not be considered as taxable income. The Tribunal emphasized that the subsidy did not fall under the purview of income-tax based on established legal interpretations.

In conclusion, the Tribunal dismissed the appeal by the revenue, upholding the Commissioner (Appeals) decision that the ITO had not validly reopened the assessment under section 147(b) and confirming that the rubber replantation subsidy received by the assessee was not taxable income.