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of <h1>High Court allows Revenue's rectification under Income Tax Act, finds extra-shift allowance error, awards costs.</h1> <h3>Commissioner Of Income-Tax, Tamil Nadu IV, Madras Versus Sundaram Textiles Limited</h3> Commissioner Of Income-Tax, Tamil Nadu IV, Madras Versus Sundaram Textiles Limited - [1984] 149 ITR 525, 43 CTR 30, 19 TAXMANN 437 Issues Involved:1. Validity of the order u/s 154 of the I.T. Act withdrawing the extra-shift allowance.2. Legality of reassessment proceedings u/s 147 of the I.T. Act.3. Propriety of excluding indirect charges from the actual cost of fixed assets.4. Allowance of extra-shift depreciation on electrical machinery.Summary:1. Validity of the order u/s 154 of the I.T. Act withdrawing the extra-shift allowance:The Tribunal held that the ITO's order granting extra-shift allowance, which was independent of the AAC's order, could not be revoked u/s 154 as it was not a mistake apparent from the record. The High Court disagreed, stating that the mistake was apparent when considering the entire assessment files, thus making the rectification u/s 154 valid.2. Legality of reassessment proceedings u/s 147 of the I.T. Act:The AAC upheld the reassessment proceedings initiated by the ITO for the assessment years 1963-64 to 1965-66, rejecting the assessee's contention regarding their validity.3. Propriety of excluding indirect charges from the actual cost of fixed assets:The AAC directed the ITO to recompute depreciation and development rebate by capitalizing the bulk of the pre-production expenses, excluding specific sums, and distributing the remaining amount among the fixed assets.4. Allowance of extra-shift depreciation on electrical machinery:The High Court noted that the statutory rules explicitly prohibit extra-shift allowance on electrical machinery. The ITO's grant of such allowance was contrary to these rules, making it a mistake apparent from the record and rectifiable u/s 154. The court emphasized that the statutory prohibition is clear and not debatable, thus supporting the rectification.Conclusion:The High Court answered the common question in the negative, against the assessee, and upheld the Revenue's right to rectify the mistake u/s 154. The court awarded costs to the Revenue, with counsel's fee set at Rs. 500.
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