MULTIMETALS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS petition under Article 226 of the Constitution has been filed by M/s. Multimetals Ltd. for quashing the notice under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), dated March 21, 1980, in respect of the assessment year 1975-76.

(2.) THE petitioner-company was being assessed to income-tax from year to year. For the accounting year which ended on March 31, 1975, relevant for the assessment year 1975-76, the petitioner-company submitted its return of income to the Income-tax Officer, A-Ward, Kota, along with a letter dated July 30, 1975. THE return was submitted along with a computation of total income, the balance-sheet and profit and loss account with schedules for the period ending on March 31, 1975. THE total income was computed by the petitioner-company at Rs. 71,58,105. THE return was accompanied by a statement of depreciation on fixed assets as on March 31, 1975, claiming normal depreciation at Rs. 7,26,513 and extra shift depreciation at Rs. 4,60,722 aggregating to Rs. 11,87,235. Development rebate was claimed on machinery of Rs. 4,84,132 at the rate of 25 per cent, amounting to Rs. 1,21,033. A list of commission paid on sales at Rs. 8,78,270.77 and on purchase at Rs. 2,08,924.84 was submitted. THE list included payment of Rs. 4,77,890.68 plus Rs. 1,24,877.10 to M/s. Metal Distributors Ltd., Bombay. A letter dated March 10, 1976, revising the return for the assessment year 1975-76 was submitted, a sum of Rs. 1,25,589 being the amount of provision for gratuity was included in the earlier return of income.

(3.) IT was submitted that depreciation at the rate of 15 per cent. was claimed on a few machines such as automatic and semi-automatic machines, tools, etc., which are covered under Article 8 of Part B under the head "III-Machinery and Plant "of the table of rates forming part of the Income-tax Rules. A note about the payment of selling agency commission to Metal Distributors and service charges to Oriental Management Service Private Limited was submitted.