COMMISSIONER OF INCOME TAX Vs. BHARAT SAW MILL

JUDGEMENT

(1.) ON being moved under Section 256(1) of the Income-tax Act, 1961 (in short, " the Act "), the Income-tax Appellate Tribunal, Cuttack Bench, Cuttack (in short, " the Tribunal "), has referred the following question to this court :

(2.) MESSRS. Bharat Saw Mill, Baripada (hereinafter referred to as " the assessee "), was assessed to tax by the Income-tax Officer, Baripada, for the assessment year 1983-84. The Commissioner of Income-tax being of the view that the assessment made for the said year was erroneous in so far as it is prejudicial to the interests of the Revenue, because there has been over-allowance on unabsorbed depreciation, set aside the assessment in exercise of his power under Section 263 of the Act. The matter was carried in appeal before the Tribunal. Noticing that several High Courts were having different views on the self-same question, it was held that the order is not prejudicial to the interests of the Revenue. The Tribunal referred to the decision of the Supreme Court in CIT v. J. K. Hosiery Factory [1986] 159 ITR 85, and held that two interpretations being possible, the interpretation that is favourable to the assessee was to be adopted. With this conclusion, the order of the Commissioner of Income-tax was set aside. Thereafter, on being moved, this reference has been made.