Law:

Section:

Income-tax Act, 1922 -Sections 2(6BB), 4, Explanation Sections 5, 34(1) proviso Explanation 5 (inserted by Finance Act, 1968) -Free reserves -Unappropriated profits -Reassessment -Notice -Reassessments charging to tax free reserves cancelled by Appellate Assistant Commissioner on ground of change of opinion -Unappropriated profits brought within ambit of free reserve by Finance Act, 1968 -Initiation of fresh reassessment proceedings to charge unappropriated profits as free reserve -Whether valid in law -Held yes -Free reserves -Unappropriated profits -Unappropriated profits brought within ambit of free reserve with effect from 1-7-1967 -Assessee's accounts ending on 31-5-1967 -Unappropriated profits as on 31-5-1967 -Whether liable to tax as free reserve -Held no -Unappropriated profits after 1-7-1967 -Whether can be treated as free reserves liable to tax -Held yes -Free reserves -Depreciation reserves to the extent of ordinary depreciation including allowances for extra shifts not to constitute free reserves under Notification No. S.R.O. 116(R)/68, dated 1-7-1968 -'Ordinary depreciation' in the Notification, whether includes initial and additional depreciation -Held no Assessment can be re-opened for any reason and without any definite information in possession of Income-tax Officer, with previous approval of Inspecting Assistant Commissioner -Combined effect of -Fee reserves, revised definition of -Business -Depreciation -Initial depreciation; not ordinary depreciation - Corresponding Sections: Income-tax Ordinance, 1979 -Section 65(1) -- ORDER The order was passed by M.T. SIDDIQUI, President.---These two appeals by a private Limited company, manufacturing transformers, electric motors and fans etc., have come up before us in the following circumstances. The assessment originally completed in this case was re-opened by the issuance of notice under Section 34 on 26th February, 1969 as in the Income-tax Officer's opinion certain free reserves had escaped assessment, Inspite of the appellant's protest against the validity of the proceedings the assessment was completed and the free reserves were computed to the extent of Rs. 19,56,993. Subsequently the Income-tax…

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