TaxTMI 
TaxTMI 
1980 (2) TMI 50
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....revised return decreased because in the original return the petitioner had not made the claim for deduction under s. 80J, that is, relief in respect of a new industrial undertaking. In the assessment for this particular year, the petitioner who had claimed relief under s. 80J in respect of a new industrial undertaking, also claimed relief under s. 80M in respect of inter-corporate dividends, gratuity of Rs. 53,041 accrued and paid during the accounting year and extra shift depreciation allowance for plant and machinery including technical know-how. The ITO passed the order in the original assessment on January 3, 1977, and he allowed all the claims except the claim under s. 80J. An application under s. 154 was made to the ITO and thereafter the ITO by his order dated July 2, 1977, accepted the application and granted relief as claimed in the letter. Thereafter, the notice dated February 23, 1978, exhibit 'D' to the petition, was issued by the respondent stating that he had reason to believe that the petitioner's income chargeable to tax for the assessment year 1975-76 had escaped assessment and that he proposed to reassess the same and asked the petitioner to file a fresh return wi....
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....se may be, for the assessment year concerned ....... .." The provisions of s. 147(b) have been interpreted by the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996. Pathak J., speaking for the Supreme Court, has pointed out that the controversy before the Supreme Court in that case was whether the view expressed by the internal audit party of the I.T. department on a point of law could be regarded as "information" for the purpose of initiating proceedings under s. 147(b) of the I.T. Act. At page 1001 of the report, it has been pointed out that the correct definition of the word "information" in s. 147(b) of the Act is "instruction or knowledge derived from an external source concerning facts or particulars, or as to law, relating to a matter bearing on the assessment.": CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC). Then, Pathak J. states (at p. 1001): "In so far as the word 'information' means instruction or knowledge concerning facts or particulars, there is little difficulty. By its inherent nature, a fact has concrete existence. It influences the determination of an issue by the mere circumstance of its relevance. It requires no further authorit....
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....be communicated by anyone. No authority is required for the purpose. " In this case, we have asked the learned Government pleader, Mr. G. N Desai, appearing on behalf of the respondent, to give us the audit objections raised on these four points in respect of which the reassessment proceedings were proposed to be started. We find from these audit objections that as regards s. 40A(7) the audit party put forward before the ITO its own interpretation of s. 40A(7) as compared to the interpretation of s. 40A(7) placed by the ITO at the time of the original assessment. The audit party was not drawing the attention of the ITO, the respondent herein, to any formal expression of law, either legislative or judicial or judge-made law, and to that extent "information" cannot be said to have been given on the point concerning s. 40A(7). It is possible that the view taken by the ITO in the original assessment regarding the interpretation of s. 40A(7) was not correct but the audit party was not drawing the attention of the ITO to any formal expression of law, judge-made or legislature made, when it put forward its own interpretation of s. 40A(7). Therefore, there was no "information" within the ....
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....ecision in the cases of Indian Aluminium Co. Ltd. [1977] 108 ITR 367 (SC) and Textile Machinery Corporations [1977] 107 ITR 195 (SC), both being decisions of the Supreme Court, this relief was admissible for the unit also. The reasoning of the ITO was not acceptable to the audit party unless it was established by detailed examination whether all the five tests laid down by the Supreme Court were fulfilled in this case. Nor is there any factual aspect about which the ITO received information from the audit party regarding the N.I.P. Expansion unit installed, by the petitioner-company as far back as 1970. It appears from the order dated September 20, 1978, passed by the Commissioner (Appeals), annex. 'C' to the petition, that this plant was installed in the year 1970 and in respect of the assessment year 1971-72 the question arose whether s. 80J relief could be granted in respect of this plant. The matter went in appeal and the Commissioner (Appeals), following the two decisions of the Supreme Court in Textile Machinery's case [1977] 107 ITR 195 and Indian Aluminium Co. Ltd.'s case [1977] 108 ITR 367, held on the facts that the N.I.P. Expansion unit was a new industrial undertaking w....
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....hat in the case of Textile Machinery Corporation [1977] 107 ITR 195, the Supreme Court approved the decision of this High Court in Nagardas Bechardas & Brothers P. Ltd. v. CIT [1976] 104 ITR 255. In that case, this High Court has held (p. 265): " Though every case must depend upon its own peculiar facts, a broadly correct solution can be arrived at by asking two questions: (1) Whether there was any activity in the existing business which could have been reconstructed and could have assumed a new form on such reconstruction; and (2) Whether the nature of the business which has assumed a new form as a result of the change which is introduced, is the same as the nature of the business which was existing before the change was introduced. If either of these two questions is answered in the negative, it would mean, prima facie, that there is no 'reconstruction' which would attract clause (i) of section 84(2) (now section 80J(4)(i)) of the Act." It is clear so far as s. 80J objection is concerned regarding N.I.P. Expansion unit that in the light of the decision of this court which was available to the ITO when he passed the original order of assessment that decision having now got the i....