COMMISSIONER OF INCOME TAX Vs. FOOD SPECIALITIES LIMITED

JUDGEMENT

(1.) The following two question have been referred to us under section 256(1) of the Income Tax Act, 1961 , for the assessment year 1964-65 :

(2.) The facts of the case are that the assessed, M/s. Food Specialities Ltd., was manufacturing condensed milk till almost the end of the assessment year 1964-65 which ended on December 31, 1963. Thereafter, it also set up a plant for manufacturing "Nescafe", which is a type of coffee. It appears that though the plant started (production) towards the end of December, 1963, the assessed claimed that manufacture up to the end of December, 1963, was on an experimental basis. The Income Tax Officer completed the assessment on May 6, 1968, and apparently, though some relief under section 84 was granted, it is said that the same does not refer to the manufacture of Nescafe.

(3.) The Income Tax Officer passed an order under section 154 of the Income Tax Act, 1961, rectifying the previous order on May 4, 1972, on the ground that coffee powder manufacture had started in December, 1963, and, Therefore, relief under section 84 had to be granted from the previous year relevant to assessment year 1964-65 and not from 1965-66. An appeal was taken to the Appellate Assistant Commissioner who by order dated August 3, 1973, held in favor of the assessed that no order under section 154 could be passed as it amounted to a change of opinion. The Income Tax Officer appealed to the Tribunal which by an order dated March 15, 1975, held that the manufacture up to the end of December, 1963, was on an experimental basis, although the manufacture was valued at about Rs. 8 lakhs. It also held that section 154 was not applicable and there was no patent error on the record. It is said :