COMMISSIONER OF INCOME TAX Vs. BAGPATIA FOOD INDUSTRIES

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated May 20, 1981, in respect of the assessment years 1972-75 to 1974-75 under Section 256(1) of the Income-tax Act, 1961 :

(2.) WHILE submitting the returns, the assessee claimed development rebate at 25 per cent. which was allowed by the Income-tax Officer initially. Subsequently, proceedings under Section 154 were initiated on the ground that the assessee was doing oil production work by installing oil expellers and, therefore, in accordance with entry 51 of Schedule V to the Act, the assessee is not entitled for development rebate at 25 per cent. The assessee was given an opportunity to show cause as to why the development rebate should not be withdrawn. The assessee submitted in writing that the product of the assessee is covered by item 31 of Schedule V to the Income-tax Act and it was also stated that the manufacturing of vegetable oil and oil cakes does also involve processing of seeds. The Income-tax Officer was of the view that the assessee is not falling in item 28 or item 31 of Schedule Y and, therefore, the assessment orders were rectified under Section 154 and development rebate allowed at the rate of 25 per cent. was reduced to 15 per cent. Against the order passed by the Income-tax Officer, an appeal was preferred to the Appellate Assistant Commissioner who came to the conclusion that since the assessee was not entitled in accordance with the specific entry of the Schedule, therefore, it is a matter which falls within the meaning of mistake apparent from record and liable to be rectified under Section 154 of the Act. The order of the Appellate Assistant Commissioner was challenged before the Income-tax Appellate Tribunal and the Tribunal found that entry 28 of the Schedule V to the Act refers to processed seeds and the authority below has not given any reason as to why the said entry would not cover the product manufactured by the assessee. It was also found that it requires a long-drawn process of reasoning and arguments and, therefore, proceedings under Section 154 could not have been taken.

(3.) THE reference is answered in favour of the Revenue and against the assessee. No order as to costs.