Development rebate withdrawal requires transfer by the assessee; special rectification provision excludes general rectification power.

Under section 155(5) of the Income-tax Act, withdrawal of development rebate required a transfer by the assessee of the installed plant or machinery. As no such transfer occurred, because the ownership change arose from a court-approved scheme and dissolution of a partner company, the statutory condition was unmet and the rebate could not be withdrawn. The rectification also had to be tested only under section 155(5), since that special provision excluded recourse to the general rectification power under section 154 on the same subject-matter. The SC upheld the assessee's position and the Revenue's challenge failed.

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Issues: (i) Whether the rectification power under section 155(5) of the Income-tax Act, 1961 could be invoked to withdraw development rebate where there was no transfer by the assessee of the installed plant or machinery. (ii) Whether, in the facts of the case, the rectification order was governed by section 155(5) alone and section 154 of the Income-tax Act, 1961 was inapplicable.

Issue (i): Whether the rectification power under section 155(5) of the Income-tax Act, 1961 could be invoked to withdraw development rebate where there was no transfer by the assessee of the installed plant or machinery.

Analysis: The condition for invoking section 155(5) was the existence of a transfer of the plant or machinery by the assessee. On the facts, the change in ownership resulted from the High Court-approved company scheme and dissolution of one partner company, not from any transfer by the assessee-firm. Since the statutory prerequisite of transfer by the assessee was absent, the withdrawal of development rebate under section 155(5) was not justified.

Conclusion: Section 155(5) was not attracted, and the withdrawal of development rebate was not sustainable.

Issue (ii): Whether, in the facts of the case, the rectification order was governed by section 155(5) alone and section 154 of the Income-tax Act, 1961 was inapplicable.

Analysis: The rectification scheme relating to withdrawal of development rebate was specifically provided for in section 155(5). Where a special provision governs the subject, the general rectification power under section 154 does not apply to the same field. The order, therefore, had to be tested only under section 155(5), and not under the general provision.

Conclusion: Section 155(5) was the exclusive provision and section 154 did not apply.

Final Conclusion: The High Court's view was upheld and the Revenue's challenge failed, leaving the assessee entitled to retain the development rebate.

Ratio Decidendi: Withdrawal of development rebate under section 155(5) requires a transfer by the assessee of the installed asset, and a special rectification provision will exclude recourse to the general rectification power for the same subject-matter.

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