Law: Income Tax Act, 1961

Section: 256

Income tax---Reopening of assessment Order passed without any information on basis of which officer passing the order could have acted Order could not be sustained. Commissioner of Income tax, Bombay City I v. Bassein Electric Co. Ltd. (1979) 118 I T R 884 (Bom.) ; Ralyant Mavji & Co. v. Commissioner of Income tax 102 I T R 287 ref. ORDER KANIA, J. Two questions have been referred to us for our determination in this reference under section 256(1) of the Income tax Act, 1961 (referred to hereinafter as "the said Act"). The said questions are as follows (1) Whether, on the facts and in the circumstances of the case, the proceedings under section .147(6) for the assessment year 1962 63 were valid in law ; and (2) Whether, for the purposes of computing the written down value for the assessment years 1962 63 and 1963-64, the contributions made by the consumers prior to January. 1961 should be deducted ? 2. The relevant assessment years are 1962 63 and 1963 64, respectively. The assessee is a Limited Liability Company which carries on the business of generation and distribution of electricity at two places, namely, Jaunpur and Fyzabad. It maintained accounts on the basis of calendar years, so that the corresponding 'previous years' for the two years in the reference are the calendar years 1961 and 1962. The assessee laid electric cables for supplying electrical energy to consumers. The consumers were required to contribute a portion. of the cost of cables. The written down value of the service connections as on 1 1 1961 was Rs. 1,21,11.00 (1,21,110) in the case of the undertaking of the assessee at Jaunpur and Rs. 2,93,527 in the, case of the undertaking of the assessee at Fyzabad, The consumers contribution at Jaunpur was Rs. 1,59,969 and that at Fyzabad was Rs. 2,70,584. Under section 10(5) of the Indian Income tax Act, 1922; the consumers contribution was not to be deducted for working out the written down value and depreciation under that Act and for both the assessment years under consideration, the assessee claimed that the written down value of the service connections as worked out under the Indian Income tax Act, 1922, should be adopted as the written…

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