TMI Blog1994 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... that the borrowed capital should be deducted in computing the capital employed for the purpose of granting relief under section 80J ? (2) If the answer to question No. 3 is in the positive whether the Tribunal was right in law in refusing to consider the applicant's contention raised in ground No. 5 of the grounds of appeal before the Tribunal ? (3) Whether the Tribunal was right in law in holding that the applicant is not entitled to deduct the surtax payable under the Companies (Profits) Surtax Act, 1964, as deduction in computing the total income of the assessee ? (4) Whether the Tribunal was right in law in holding that the applicant is not entitled to go on appeal on the Income-tax Officer's refusal to grant interest under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relying on an unreported decision in Income-tax References No. 80 and 81 of 1972, a case which arose in relation to the liability for interest under section 139(8) and section 215 of the Act. The question of appealability in relation to the liability for interest under sections 139(8) and 215 of the Act has been the subject of consideration by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961. The court considered the question of appealability under section 246(c) of the Act. The appeal to the Appellate Assistant Commissioner in that case related only to the levy of interest under sections 139(8) and 215 and no other part of the assessment was subject to the appeal. The Supreme Court observed that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the case with that in National Products [1977] 108 ITR 935 (Kar) and held that the order refusing interest under section 214 was also appealable when the assessment itself was being challenged on other grounds. We are in agreement with this view. Standing counsel for the Revenue, Sri. P. K. Raveendranatha Menon, however, attempted to draw a distinction between cases of levy of interest under sections 139(8) and 215, where the assessee is liable for interest and a case under section 214 where the Department becomes liable to pay interest to the assessee for the excess amount of advance tax paid by the assessee. In either case, the liability for the interest, whether of the assessee or of the Department, depends on the final assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit fixed at Rs. 53,63,762. But the Income-tax Officer limited the allowance to an amount of Rs. 47,67,501. Accordingly, he allowed a development rebate of Rs. 11,91,875 as against Rs. 13,26,440 claimed. The disallowance was based on the provisions of section 16(c) of the Finance Act, 1974. The provisions of section 33 of the Income-tax Act allowing development rebate were operative only up to May 31, 1974, by virtue of Notification No. 2167 issued by the Government of India on May 28, 1971. But section 16 of the Finance Act, 1974, extended the benefit to a limited extent and in particular cases. We are concerned with cases covered by clause (c) of the section. It provided that development rebate will be allowed in respect of any machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rebate had been claimed by the assessee and, secondly that it should have been held that the assessee had taken steps for the manufacture of the plant and machinery before December 1, 1973, and hence the claim should have been allowed in toto to the extent of Rs. 13,26,440. We do not find our way to accept the contention of the assessee. The assessee becomes entitled to the development rebate under the extension granted by section 16 of the Finance Act, 1974, in a case where the machinery had been manufactured in undertakings owned by it and steps in that direction had been taken before December 1, 1973. The case set up by the assessee was that it had manufactured these items, a case which found acceptance with the Tribunal. But, in doing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal's decision does not therefore accord with the tenor of section 16(c) and, therefore, the allowance of the development rebate in relation to the eight items mentioned in paragraph 2 of its order cannot be sustained. We may state here that counsel for the assessee did not press his other contention regarding the integral nature of the plant and machinery, according to us rightly. We are not, therefore, dealing with the matter at length. Questions Nos. 1, 3 and 5 referred to us for our opinion are therefore answered against the assessee and in favour of the Revenue. The fourth question is answered against the Revenue and in favour of the assessee. We decline to answer the second question. The references are answered as above. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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