Appellate effect cannot reopen rebate computation when the issue was not before the appellate authority.

While giving effect to an appellate order under section 31(4) of the Indian Income-tax Act, 1922, the Income-tax Officer could not reduce the rebate originally granted by treating the original computation as inconsistent with the Finance Act, 1958. Entitlement to the rebate rate was not an issue before the Appellate Assistant Commissioner, and the matter was not a mere mechanical recomputation. Once the assessment had merged in the appellate order, the rebate could not be reopened under the guise of consequential implementation, and the issue also fell outside rectification under section 35. The reduction of rebate was therefore beyond the officer's power.

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Issues: Whether, while giving effect to an appellate order under section 31(4) of the Indian Income-tax Act, 1922, the Income-tax Officer could reduce the rebate originally granted on the ground that the original computation was inconsistent with the Finance Act, 1958.

Analysis: The question of entitlement to rebate at a particular rate was not before the Appellate Assistant Commissioner and was not a matter of mere mechanical recomputation. The Income-tax Officer could not, after the assessment order had merged in the appellate order, determine afresh the rebate payable merely in the guise of implementing the appellate decision. Such a matter was outside the scope of rectification under section 35 of the Indian Income-tax Act, 1922, and could not be reopened through a consequential order under section 31(4).

Conclusion: The reduction of rebate was beyond the Income-tax Officer's power under section 31(4) of the Indian Income-tax Act, 1922. The challenge failed and the writ court's decision in favour of the assessee was upheld.

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