TMI Blog1980 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... merged with the order of the Appellate Assistant Commissioner? (iii) Whether, on the facts and in the circumstances of the case, the 'actual cost' of the service lines owned by the assessee-company for the purpose of allowing depreciation and development rebate under the Income-tax Act, 1961, should be determined not in accordance with the provisions of the said Act but in accordance with those of the Indian Electricity Act, 1910, and the Electricity (Supply) Act, 1948 ? " The first two questions were referred at the instance of the department. Question No. 3 was referred at the instance of the assessee. The assessee is an electric supply company. It used to close its account on the financial year basis. Its accounting year relevant to the assessment year 1962-63, ended on March 31, 1962. For this year an assessment order under s. 143(3) was made on 30th November, 1966, allowing the following amounts of depreciation and development rebate in connection with the service lines which formed part of the company's assets. Rs. Depreciation 29,133 Development rebate 8,017 Total 37,150 On 27th August, 1968, a notice under s. 154 of the I.T. Act, 1961, was issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the written down value as on 31st March, 1961, had to be worked out necessarily on the basis of the provisions of the Act of 1922. On this point the Tribunal came to the conclusion that s. 43(1) of the Act of 1961 had no retrospective application and hence the "actual cost" as defined in s. 10(5) of the Act of 1922 cannot be disturbed by taking recourse to the provisions of s. 43(1). They held that the ITO was not justified in computing the written down value of the service lines as determined for the period up to 31 March, 1961. Their finding was that "in the absence of any provision to the contrary, the written down value as on March 31, 1961, must be taken to be the written down value of the same assets as on April 1, 1961". The second point raised before the Tribunal by the assessee was that the Indian Electricity Act, 1910, read with the Electricity (Supply) Act of 1948 provided a special mode of calculating depreciation and written down value of the service lines and those Acts also required the undertaking supplying electricity to set apart the amounts collected from the consumers against the service lines for being handed over to the Government or the Electricity Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act ". The return of income for 1962-63 was filed after the commencement of the new Act of 1961 and, therefore, the I.T. Act of 1961 applied. The " actual cost " had to be determined under s. 43(1) of the new Act. The written down value could not be determined under the old Act of 1922 for the assessment year 1962-63. This is the view which the ITO took in his order under s. 154 and we think he was right. It will also be wrong to say that the written down value as on 31st March, 1961, was the same as on 1st April, 1961. For the assessment year 1961-62, the written down value as on April 1, 1960, had to be determined and depreciation allowed thereon under s. 10(5) of the Act of 1922, which was applicable at that time. The written down value thus reduced would be the written down value of the assets as on March 31, 1961, and would also have been taken as the written down value on April 1, 1961, had the 1922 Act continued in force unamended. However, the position changed for the assessment year 1962-63, for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The operative order in the field was the order of the AAC and not of the ITO. After the order of the AAC dated 23rd January, 1968, the ITO had no jurisdiction to issue a notice under s. 154. Counsel for the department referred us to s. 154(1A), which says: " Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided." This amendment was made on 6th October, 1964. Even before the amendment numerous decisions took the view that even after an appeal from an order has been preferred and decided, a mistake in that part of the order which was not the subject-matter of the appeal and was left untouched by the appellate authority can be rectified by the authority which passed the order. [See Karsondas Bhagwandas Patel v. G. V. Shah, ITO [1975] 98 ITR 255, 262 (Guj)]. This principle is now given statutory recognition by sub-s. (1A) of s. 154. The question is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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