TMI Blog1997 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... t rebate granted for the assessment years 1962-63, 196364, 1967-68 and 1968-69 is proper and justified ? The assessee was a partnership firm having been constituted on September 1, 1960. It was running a steel rolling mill. Initially, there were four partners, namely, S. L. Nahata, M. S. Bedi, Biharilal and M. K. Raheja, in the assessee-firm. Two of the partners, Biharilal and M. K. Raheja, subsequently retired from the partnership and the partnership was reconstituted with the remaining two partners continuing the same business. On March 3, 1968, Shri M. S. Bedi, one of the two partners, died. Since only one surviving partner was left, the partnership stood dissolved. On March 4, 1968, a new partnership was constituted comprising Shri S. L. Nahata and the legal heirs of Shri M. S. Bedi to carry on the business undertaking previously carried on by the partnership firm of which Shri M. S. Bedi was a partner. In these appeals we are concerned with the partnership firm as it existed prior to its dissolution on March 3, 1968. The assessee-firm had obtained the benefit of development rebate under section 33(1)(a) of the Act during the assessment years in question. Since the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this clause shall have effect in respect of such ship as if for the words 'seventy-five', the word 'fifty' had been substituted. Explanation.-- For the removal of doubts, it is hereby declared that the deduction referred to in -section 33 shall not be denied by reason only that the amount debited to the profit and loss account of the relevant previous year and credited to the reserve account aforesaid exceeds the amount of the profit of such previous year (as arrived at without making the debit aforesaid) in accordance with the profit and loss account. (b) If any ship, machinery or plant is sold or otherwise transferred by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired or installed, any allowance made under section 33 or under the corresponding provisions of the Indian Income-tax Act, 1922 (11 of 1922), in respect of that ship, machinery or plant shall be deemed to have been wrongly made for the purposes of this Act, and the provisions of sub-section (5) of section 155 shall apply accordingly : Provided that this clause shall not apply,-- (i) where the ship has been ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he implications of these conditions are that where the assessee does not utilise the reserve account for the purposes of his business during a period of eight years, then the very condition on which the rebate is granted would remain unfulfilled. Hence, the original grant of development rebate itself must perforce be regarded as having been made without the necessary condition being fulfilled therefor. The High Court has observed that in the present case the assessee-firm became extinct before the expiry of the eight-year period and what came afterwards was a different entity, even if it comprised only the surviving partner and the deceased partner's legal representatives. According to the High Court there was a basic failure of the fact situation in the assessee's case to fit in with the terms of the statutory grant of development rebate implicit in the statutory provisions. Mrs. Janaki Ramachandran, learned counsel appearing for the assessee, has submitted that development rebate is granted in respect of a business and that under section 33(1)(a) and section 34(3)(a) what is required is that the business must be continued for the prescribed period of eight years a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these provisions means the partnership firm as it stood before dissolution and would not cover a newly constituted firm after the dissolution of the old firm. Having regard to the words which is owned by the assessee and is wholly used for the purposes of the business carried on by him, in section 33(1)(a), it must be held that the benefit of development rebate is available only to the assessee, which is owning the machinery or plant and is using it wholly for the purpose of the business carried on by him. Similarly, in section 34(3)(a), the words used are to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking . The grant of development rebate under section 33(1)(a) is subject to the conditions laid down in section 34(3)(a), which means that the assessee who has obtained the development rebate under section 33(1)(a) must also be the assessee who should utilise the amount credited to the reserve account during the period of eight years next following for the purpose of the business of the undertaking for which the development rebate was given. In other words, the expression by the assessee in these pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner to exercise his powers of decision was raised by the assessee either before the Commissioner or before the Tribunal. Even otherwise there is no merit in this contention. Merely because the Income-tax Officer could have rectified the order, the Commissioner could not be precluded from exercising the power conferred on him under section 263. The power of rectification conferred on the Income-tax Officer under section 155 and the power of revision conferred on the Commissioner under section 263 are distinct powers. The principle that one is a special provision and the other is a general provision has no application. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to revise an order passed by the Assessing Officer, if he considers it to be erroneous and prejudicial to the interests of the Revenue. We find no reason to limit this power by reference to section 155. As regards his taking into consideration an event which had occurred subsequent to the passing of the order by the Income-tax Officer, it may be stated that in Explanation (b) in section 263 there is an express provision wherein it is prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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