Law:

Section:

Section 34(3)(a) of the income-tax act, 1961-Development rebate-Conditions for allowance of-Assessee-firm was granted development rebate on new machinery installed by it-Firm dissolved on death of one partner within a period of eight years after installation of machinery-Surviving partner and legal heirs of deceased partner constituted fresh partnership and continued same business with all its assets and liabilities-Commissioner, acting under section 263, cancelled development rebate allowance granted already-Whether justified-Held, on facts, yes Facts The assessee-firm was granted development rebate for some new machinery installed by it. Within a period of eight years after the installation of that machinery, one of the two partners of the assessee-firm died and consequently the firm stood dissolved. Thereafter, the surviving partner and the heirs of the deceased partner constituted a fresh partnership and continued the business with all its assets and liabilities including the machinery on which development rebate had been granted and in respect of which development rebate reserve had been created in the books of account. The Commissioner, having came to know this subsequent turn of events in the career of the assessee-firm, initiated proceedings under section 263 against it and directed the ITO to cancel the development rebate allowance granted earlier. He pointed out that by reason of the dissolution of the firm, the development rebate reserve account ceased to be utilised by the assessee for the full period of eight years following the installation of the machinery for the purposes of the assessee's undertaking and as such the condition under which the development rebate was granted had not been fulfilled. On appeal, the Tribunal upheld the action of the Commissioner. On reference : Held On reading the provisions of section 34(3), it is apparent that as part of the fundamental require- ment for the grant of development rebate, the creation of a development rebate reserve is a necess- ary first step, but that alone is not enough. The reserve account has got to be utilised by the asses- see for the purposes of the business of the undertaking for a period of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492