BHARAT SURYODAYA MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad, Bench "A", has referred, for the opinion of this Court, the following question under S. 256(1) of the IT Act, 1961 :

(2.) THE relevant assessment year is 1974 75. The assessee is a limited company manufacturing textile goods. For the said assessment year, the ITO had allowed normal depreciation on electrical machinery and had allowed extra shift allowance thereon. The ITO thereafter found that the extra shift allowance was not allowable on electrical machinery in view of item III(iv)(1) of Appendix I to the IT Rules, 1962. A show cause notice was, therefore, issued to the assessee proposing to rectify the mistake. After hearing the assessee, the ITO withdrew the extra shift allowance granted on the electrical machinery and the depreciation granted thereon. On appeal, the CIT held that the ITO had committed an error in invoking the provisions of S. 154 of the Act, inasmuch as, the question as to whether the electrical machinery shall fall within the description of item III(iv)(1) or whether the machinery formed part and parcel of the textile machinery as a whole, was a matter which could be decided only after some enquiry and on which two opinions could exist. The CIT, therefore, set side the rectification order made by the ITO. On appeal before the Tribunal, it was held that the assessee was not entitled to extra shift allowance on the electrical machinery. It was held that the ITO had committed an apparent mistake and he was fully competent to rectify the same under S. 154 of the Act.

(3.) IN view of the above specific provision, it is clear that the extra shift allowance benefit was not available for the electrical machinery. The ITO had, therefore, no power to allow extra shift allowance on electrical machinery. He had, therefore, committed a mistake which he could validly rectify under S. 154 of the Act by withdrawing the extra shift allowance on the electrical machinery.