COMMISSIONER OF INCOME TAX Vs. SURESH CHANDRA JAIN

JUDGEMENT

(1.) THIS is a reference at the instance of the Commissioner of Income-tax under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Two questions are referred for the consideration of this court and they are :

(2.) THE assessee filed appeals before the Commissioner of Income-tax (Appeals) against the orders of the Income-tax Officer withdrawing the development rebate which was allowed for the two years under consideration. THE Commissioner (Appeals) allowed the assessee's appeal holding that when the assessee threw the assets in respect of which development rebate was allowed into the common stock of the partnership, there was no unconditional parting with the assets. Learned Commissioner held that the assessee continued to retain some form of interest in the assets. In that view, the provisions of section 2(47) of the Act, the Commissioner held, were not attracted and withdrawal of the development rebate was not justified in law. THE Income-tax Officer's orders withdrawing the development rebate originally allowed were accordingly cancelled by the Commissioner.

(3.) WE have heard learned standing counsel for the Revenue, Shri M. S. N. Murthy, and Shri M. J. Swamy, learned counsel for the assessee. On the facts referred to above, the following questions do arise for consideration in this reference :