HARDILLIA CHEMICALS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under S. 256(1) of the IT Act, 1961 made at the instance of the assessee, the Tribunal, Bombay 'C' Bench, Bombay, has referred the following questions of law to this Court for opinion :

(2.) THE controversy pertains to asst. year 1972 73, the relevant previous year being the year ended on 31st Dec., 1971. The original assessment of the assessee was completed by the ITO on 30th Nov., 1974. In the said assessment, the ITO while computing the capital employed for the purposes of working out relief under S. 80J of the Act took into consideration Rs. 2,70,023, being the value of capital work in progress. He also did not reduce the written down value of the assets entitled to depreciation by the amount of extra shift allowance allowed in the past. The CIT called for the records of the said assessment and, on examination thereof, was satisfied that the order of assessment passed by the ITO was erroneous and prejudicial to the interests of the Revenue. He, therefore, initiated proceedings under S. 263 of the IT Act, 1961 (the "Act") and after giving the assessee an opportunity of being heard, by his revisional order dt. 25th Nov., 1976 withdrew the relief granted to the assessee by the ITO under S. 80J of the Act and directed the ITO to redetermine the relief afresh in accordance with law after giving an opportunity to the assessee of being heard in the matter. The appeal filed by the assessee before the Tribunal against the above revisional order of the CIT under S. 263 of the Act was dismissed as barred by limitation.

(3.) IN the light of the above observation, the Tribunal considered the question whether in the instant case the CIT had, in his order under S. 263, recorded a definite finding on the question of inclusion of the value of work in progress in the capital employed for the purpose of computing relief under S. 80J or whether he had merely made some observations in regard to relief under s. 80J and remanded the matter to the ITO without any finding on that question, leaving it open to him to decide the controversy afresh in the light of his observations. For that purpose, the Tribunal considered the revisional order of the CIT and on a careful perusal of the same, found that in the present case, the CIT had himself finally decided the issue and held that the value of work in progress cannot be included in the computation of capital employed for the purpose of calculating relief under S. 80J of the Act. The Tribunal further found that the CIT also decided himself the question whether written down value of assets entitled to depreciation should be reduced by the extra shift allowance allowed in the past and held in the affirmative. The Tribunal, therefore, held that the ITO could not have considered the above controversies while passing a fresh order of assessment to give effect to the revisional order and recomputing the amount of relief under S. 80J in accordance with the directions of the CIT contained therein. In that view of the matter, the Tribunal affirmed the view of the CIT(A) and dismissed the appeal of the assessee and held that the appeal of the assessee before the CIT(A) was not competent. Hence, this reference to this Court at the instance of the assessee.