Law:

Section:

JUDGMENT Prem Chand Pandit, J.-At the instance of the revenue, the Income-tax Appellate Tribunal has referred the following question of law for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the Income-tax Officer to first allow full development rebate under the Rules and subsequently withdraw J it under section 35(11) of the Indian Income-tax Act, 1922, if applicable ?" The assessee is a private limited company plying passenger buses. Its assessment for the year 1958-59 (accounting year ended on 31st March, 1958) was at first completed on 16th July, 1960, but the same was subsequently set aside by the Appellate Assistant Commissioner, who directed that a fresh assessment be made. That was done by the Income-tax Officer on 31st August, 1967. The company claimed allowance, by way of development rebate, of Rs. 44,586 under section 10(2)(vib) of the Indian Income-tax Act, 1922, hereinafter called "the Act", in respect of buses purchased by it before 31st December, 1957, in the computation of its business income. The Income-tax Officer, however, did not allow this rebate on the ground that all the said buses were sold by the company within eight years from the date of their purchase. When the matter came before the Appellate Assistant Commissioner, it was submitted on behalf of the company that although section 35(11) of the Act empowered the Income-tax Officer to rectify his order by with-drawing the development rebate in such cases, yet under the law, the rebate should first be allowed under section 10(2)(vib) and then withdrawn under section 35(11) of the Act. The Appellate Assistant Commissioner however, did not accept this submission and upheld the order of the Income-tax Officer observing that at the time when the Income-tax Officer was making the fresh assessment, he knew that, as the buses had been sold by the company within eight years of their purchase, the development rebate would have to be withdrawn subsequently, and, therefore, there was no point in allowing it in the first instance and then withdrawing the same later on. The Appellate Assistant Commissioner was also of the…

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