TaxTMI 
TaxTMI 
1997 (8) TMI 52
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.... December 11, 1985, is prejudicial to the interests of the Revenue and hence erroneous, requiring interference by the Commissioner under section 263 of the Income-tax Act, 1961. The Inspecting Assistant Commissioner of Income-tax (Assessment) Madurai, as the Assessing Officer while making the assessment of the assessment year 1982-83 by his assessment order passed on March 25, 1985, inter alia, omitted to allow depreciation on the staple fibre yarn machinery used by the petitioner, though he had in the said order decided to grant depreciation at 15 per cent. on the said machinery. The writ petitioner filed an appeal against the said order to the Commissioner of Income-tax (Appeals), Madurai, who by his order in I.T.A. Nos. 51/84-85, 61/85-86 and 70/85-86 dated October 14, 1985, allowed the claim of the writ petitioner in the following terms : "Mistake in computation of depreciation Rs. 8,97,482---the Inspecting Assistant Commissioner in para 14 of the assessment order (stated ?) that he would allow a depreciation of Rs. 8,97,482 but actually he forgot to allow this deduction while computing the total income which he arrived at Rs. 31,90,314. This appears to be an oversight. H....
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....------------------ Income-tax on Rs. 8,99,180 at 55 % 4,94,549 Add : Surcharge at 21/2 % 12,364 -------------------- Total 5,06,913 Less : tax paid 7,21,798 -------------------- Balance refund 2,14,885 -------------------- (Sd.) A. Selvaraj Inspecting Assistant Commissioner." According to the Revenue, the staple fibre machinery was entitled to depreciation only at 10 per cent. and not at 15 per cent. as presumed and granted by the Inspecting Assistant Commissioner of Income-tax, Madurai, and that the order of the Commissioner of Income-tax (Appeals), Madurai, dated October 14, 1985, referred to above dealt with the appeal relating to the three assessment years 1978-79, 1979-80 and 1982-83. In respect of the assessment year 1979-80, one of the issues that was considered and decided in the said order related to the amount of depreciation that will be allowable in respect of staple fibre machinery. In disposing of the issue, the Commissioner of Income-tax (Appeals) Madurai, held as follows: "The appellant says that depreciation at the rate of 15 per cent. should be allowed on these machines which manufacture staple fibre yarn and the appellant says ....
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.... under section 263 of the Act, rushed to this court and filed the above writ petition to call for the records of the respondent dated February 24, 1987, and to quash the same, and consequently to restrain the Commissioner of Income-tax from taking any further proceedings in this regard to the assessment of the petitioner pursuant to his notice in C. No. 401/1/104/1986-87 dated February 24, 1987, for the assessment year 1982-83. In the writ petition, it was contended that the original assessment order of the assessing authority has merged with the order of the appellate authority and, therefore, no order of the assessing authority survives or is available for revision under section 263 of the Act by the Commissioner and that section 263 empowers the Commissioner to revise the orders of his subordinates only, i.e., the assessing authority, and inasmuch as the order of the assessing authority has merged with that of the appellate authority and inasmuch as the ground on which the respondent seeks to revise the original assessment has been considered and allowed by the appellate authority, the respondent has absolutely no jurisdiction to invoke the powers under section 263 of the Act. ....
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....er, this writ appeal has been filed in this court. Mr. S. V. Subramanian, learned senior standing counsel for income-tax contended that the learned single judge is not correct in his view that para. 27 of the order of the appellate authority would show that the subject-matter of the issue relating to allowance of the claim relating to depreciation was very much before the appellate authority and considered and dealt with and ultimately allowed by the said appellate authority. He has also relied on the decision in Vedantham Raghaviah v. Third Addl. ITO [1963] 49 ITR 314 (Mad), which according to him is the authority for the decision that once the order of rectification is passed, the assessment itself is modified and what remains is not the order of rectification but only the assessment as rectified. In ground No. 9 it has been specifically stated that the writ petition having been filed only against a show-cause notice, the respondent herein should not have been permitted to bypass the remedy under the statute but should have been directed to file its reply to the said show-cause notice and pursue the remedies under the statute. The writ petition was admitted on March 5, 1987....
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....urt by filing the above writ petition to quash the notice dated February 24, 1987. However, the writ petition was entertained by this court and was allowed ultimately quashing the impugned notice. This apart, during the pendency of the writ petition, this court permitted the Income-tax Officer, Madurai, to pass final orders pursuant to the impugned notice but directed that it shall not give effect to the same until the disposal of the writ petition. It is now stated that pursuant to the said direction, the Commissioner of Income-tax has passed his final orders on March 21, 1988, but as directed by the court, it was not given effect to. The order passed by the Income-tax Officer, Madurai, in original was placed before us. The assessee was represented by Mr. M. S. Sivanath, director of the assessee, before the officer and he also argued the matter and placed materials in support of their claim. The officer ultimately passed an order modifying the assessment by restricting the depreciation on staple fibre manufacturing machinery to 10 per cent. Against this order, an appeal would lie before the Income-tax Appellate Tribunal which should be filed within 60 days from the date of receipt....