D S JOSHI Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS is an assessee's reference relating to his assessment for the assessment years 1964-65 to 1970-71. The assessee, it is common ground, has been purchasing new machinery year after year on which he claimed and was allowed development rebate as under : <FRM>JUDGEMENT_99_TLMHH0_1991Html1.htm</FRM>

(2.) BY a deed of partnership dated January 1, 1970, he converted his business into a partnership and contributed the business hitherto run by him, as proprietor by way of his capital contribution. Thereafter, his entire business, including the assets on which development rebate was allowed to him from year to year, became the property of the partnership firm in which he was also a partners. By applying the provisions of section 155 (5) of the Income-tax Act, the Income-tax officer withdrew the development rebate allowed to him in the earlier years under section 34 (3) (b) holding that it was a case of transfer of assets within eight years of installation. The appeals filed by the assessee before the Appellate Assistant Commissioner and the Tribunal failed.

(3.) THE Income-tax Appellate Tribunal has referred to this court the following two questions of law under section 256 (1) of the Income-tax Act, 1961 :