TMI Blog1995 (5) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and disallowed the expenditure incurred on ash disposal. This expenditure was treated as a capital expenditure. The claim in regard to the depreciation and investment allowance was not disturbed. The CIT found that the order passed by the Assessing Officer was erroneous and prejudicial to the interests of the revenue, inasmuch as, depreciation and investment allowance were allowed on the fixed assets which were not fully owned by the appellants. He, therefore, assumed jurisdiction under section 263 of the Act. 3. The appellants made the following objections before the CIT : (i) the reassessment order passed under section 147(a) was not erroneous ; (ii) even assuming that the order was erroneous it was not prejudicial to the interest of the revenue ; (iii) even assuming that the order was both erroneous and prejudicial to the interest of the revenue, it could not be revised under section 263 if it was in accordance with the provision of the I.T. Act ; (iv) since the original assessment order was passed prior to 1-10-1984, the provision of section 263 as stood prior to such date would be applicable by which revision of assessment order was prohibited ; (v) the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments and to disallow depreciation and investment allowance for the years under consideration. 8. S/Shri Dinesh Vyas and P.C. Tripathi, learned Counsel for the assessee appeared before us. Relevant documents and papers were filed. It was vehemently contended that the conditions precedent for assuming jurisdiction under section 263 of the Act did not exist, as the order of the Assessing Officer was neither erroneous nor prejudicial to the interest of the revenue. f9. Our attention was invited on the time lag between the orders passed under section 143(3) and under section 263. It was submitted that policy of law is that there must be a point of finality in all legal proceedings. Reliance was placed on the decision of the Apex Court rendered in the case of Parashura Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1. 10. The learned Counsel further invited our attention on the provisions of section 263(2) as it stood before 1-10-1984. Relevant portion of the said section is reproduced here as under : " REVISION OF ORDER PREJUDICIAL TO THE REVENUE." 263.(1) ...................................................................................... (2) No order shall be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 147(a). Section 147(b) permits reassessment if the Assessing Officer had in consequence of information in his possession reasons to believe that income chargeable to tax had escaped assessment. 14. Once the Assessing Officer opted to reopen an assessment under section 147(a), he had no option but to disallow ' ash disposal ' expenses alone. He could not have disallowed depreciation and investment allowance even if he wanted to do so as he was making assessment under section 147(a). 15. Adverting our attention on the order of the CIT passed under section 263, it was stated that in this order the learned CIT relied on the decision rendered in the cases of V. Jagmohan Rao and American President Lines Ltd. On the basis of these decisions, the CIT concluded that once valid proceedings under section 147 are started, the Assessing Officer has a duty to complete the assessment de novo. It was submitted that while passing order under section 263, the CIT misconceived, misinterpreted and misunderstood the ratio decidendi, laid down in the case of Jagmohan Rao and others. Thus, the CIT arrived at an erroneous conclusion. The Apex Court in the case of CIT v. Sun Engg. Works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 10(2)(vi) of the Indian Income-tax Act, 1922, is admissible only where the assessee is the owner of the property ; it is not admissible in respect of a fractional claim. Under the scheme of the Act, there is no scope for maintaining a separate value of a part of an asset to work out depreciation." In view of the above, according to the learned Departmental Representative, the CIT was correct in assuming jurisdiction under section 263 and thereby disallowing the claim of depreciation and investment allowance. 21. We have heard the rival submissions in the light of the material placed before us and the precedents relied upon. It is a cardinal principle of law ; that law suits be not protracted otherwise great oppression might be done under the colour and pretence of law. This idea is inculcated in a well known Latin dictum: " INTERERT REPUPLICA UT SIT FINIS LITUM " In the case of Parashuram Pottery Works Co. Ltd, the Apex Court has held that State issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other sphere of human society. 22. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising such power. It is not open for the CIT to travel beyond that time limit. If the power is exercised within the limitation period, it can produce results. After lapse of limitation, this power cannot be exercised. The limitation is put to bring finality. In order to avoid prejudice and hardship to the assessee, ordinarily this power should be exercised within a reasonable time once the assessment becomes final, lest it be a DAMOCLE'S SWORD hanging over the head of the assessee, for all times. The law of limitation is a procedural law. It does not take away any right. It bars only a remedy. Where, however, a right has accrued to a party because the prescribed period of limitation has expired that accrued right cannot be taken away by any subsequent Act which enlarges time. 24. As a consequence of the amendment of section 263, the limitation for passing an order under the said section stands extended in cases where the period of limitation originally laid down in that section had not expired before 1-10-1984. In order to avoid controversy and litigation in the matter of CBDT vide its Circular No. 402 dated 1-11-1984 rendered direction to the revenue authorities; we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
