TaxTMI 
TaxTMI 
1996 (6) TMI 5
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....sp; Rs. Rs. Total income after giving effect to the AAC's order 86,60,247 Development rebate set off for the asst. yr. 1962-63 71,53,652 ---------- For the asst. yr. 1963-64 15,06,595 86,60,247  ....
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....d in s. 154 of the Act. The assessee also contended that there was no shortfall of the development rebate reserve. According to the assessee the reserve to be created from 1961-62 to 1968-69 would be Rs. 1,18,47,851 and the reserve actually created was Rs. 1,39,07,312. Therefore the excess development rebate available was Rs. 20,59,561. Thus as against withdrawal of Rs. 16,00,000 there was excess reserve of Rs. 20,59,561 according to the assessee. 5. But according to the ITO, under s. 34(3) the assessee should have created 75 per cent of the development rebate as reserve which worked out to Rs. 1,00,56,033 up to the asst. yr. 1967-68 taking into account the reserve of Rs. 64,95,185 to be created for the asst. yr. 1967-68. The assessee had created development rebate reserve of Rs. 1,07,07,312 but the directors in presenting the accounts for the subsequent accounting year 1967 (calendar year) relevant to the asst. yr. 1968-69 had recommended that Rs. 16,00,000 should be withdrawn from the development rebate reserve which would result in a deficiency of Rs. 9,48,721. If this was considered against the reserve originally created by the assessee, the actual reserve created up to the ....
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....rpose of distribution of dividends there was no proper compliance with the requirements of s. 34(3) and hence the deduction for development rebate allowable for the asst. yrs. 1962-63 to 1963-64 should be determined at Rs. 73,95,286. 9. According to the Tribunal it was manifest there is no patent mistake apparent on record warranting exercise of jurisdiction under s. 154 of the Act. The Tribunal further pointed out that regarding the ITO's reference to the declaration of dividend of Rs. 16,00,000 the AAC has extracted the relevant portion from the printed account which would go to show that as on 31st Dec., 1967 the assessee found that there was excess provision to the extent of Rs. 16,00,000 and it was only after the adjustment of the excess provision the declaration of dividend was made. Therefore the Tribunal considered that it is not necessary for it to go into the merits of the case in the appeal presented before it. Accordingly the Tribunal confirmed the order passed by the AAC. 10. Before us the learned standing counsel appearing for the Department reiterated the arguments as was advanced before the Tribunal in the matter of exercising jurisdiction under s. 154 of the ....
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....pparent on record. 12. We have heard both the learned standing counsel appearing for the Department as well as the learned counsel appearing for the assessee. 13. The fact remains that for the asst. yr. 1967-68 the development rebate of earlier years amounting to Rs. 86,60,247 has been carried forward to be set off against the income determined. In terms of the provisions of s. 34(3) of the Act the assessee should have created 75 per cent of the development rebate to be allowed as reserve and as such the reserve that should have been created by the assessee even according to its calculation works out to Rs. 1,00,56,033 upto and including the asst. yr. 1967-68 taking into account the reserve of Rs. 64,95,185 to be created for 1967-68. The assessee originally created the reserve of Rs. 70,00,000 in the accounts of the previous year relevant for the asst. yr. 1967-68 and the total reserve created upto and including the asst. yr. 1967-68 was Rs. 1,07,07,312. It was found that the directors while representing the accounts for the subsequent year viz., 1968-69 to the general body have recommended that Rs. 16,00,000 should be withdrawn from the development rebate account of earlier ....