TaxTMI 
TaxTMI 
1995 (5) TMI 49
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....al expenditure. The claim in regard to the depreciation and investment allowance was not disturbed. The CIT found that the order passed by the Assessing Officer was erroneous and prejudicial to the interests of the revenue, inasmuch as, depreciation and investment allowance were allowed on the fixed assets which were not fully owned by the appellants. He, therefore, assumed jurisdiction under section 263 of the Act. 3. The appellants made the following objections before the CIT : (i) the reassessment order passed under section 147(a) was not erroneous ; (ii) even assuming that the order was erroneous it was not prejudicial to the interest of the revenue ; (iii) even assuming that the order was both erroneous and prejudicial to the interest of the revenue, it could not be revised under section 263 if it was in accordance with the provision of the I.T. Act ; (iv) since the original assessment order was passed prior to 1-10-1984, the provision of section 263 as stood prior to such date would be applicable by which revision of assessment order was prohibited ; (v) the extended time limit as per the amendment will not be applicable in view of Circular No. 402 of the CB....
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..... 8. S/Shri Dinesh Vyas and P.C. Tripathi, learned Counsel for the assessee appeared before us. Relevant documents and papers were filed. It was vehemently contended that the conditions precedent for assuming jurisdiction under section 263 of the Act did not exist, as the order of the Assessing Officer was neither erroneous nor prejudicial to the interest of the revenue. f9. Our attention was invited on the time lag between the orders passed under section 143(3) and under section 263. It was submitted that policy of law is that there must be a point of finality in all legal proceedings. Reliance was placed on the decision of the Apex Court rendered in the case of Parashura Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1. 10. The learned Counsel further invited our attention on the provisions of section 263(2) as it stood before 1-10-1984. Relevant portion of the said section is reproduced here as under : " REVISION OF ORDER PREJUDICIAL TO THE REVENUE." 263.(1) ...................................................................................... (2) No order shall be made under sub-section (1)-- (a) to revise an order of reassessment made under section 147, or ....
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....uence of information in his possession reasons to believe that income chargeable to tax had escaped assessment. 14. Once the Assessing Officer opted to reopen an assessment under section 147(a), he had no option but to disallow ' ash disposal ' expenses alone. He could not have disallowed depreciation and investment allowance even if he wanted to do so as he was making assessment under section 147(a). 15. Adverting our attention on the order of the CIT passed under section 263, it was stated that in this order the learned CIT relied on the decision rendered in the cases of V. Jagmohan Rao and American President Lines Ltd. On the basis of these decisions, the CIT concluded that once valid proceedings under section 147 are started, the Assessing Officer has a duty to complete the assessment de novo. It was submitted that while passing order under section 263, the CIT misconceived, misinterpreted and misunderstood the ratio decidendi, laid down in the case of Jagmohan Rao and others. Thus, the CIT arrived at an erroneous conclusion. The Apex Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 explained the true meaning of observation as referred in V. Jag....
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....see is the owner of the property ; it is not admissible in respect of a fractional claim. Under the scheme of the Act, there is no scope for maintaining a separate value of a part of an asset to work out depreciation." In view of the above, according to the learned Departmental Representative, the CIT was correct in assuming jurisdiction under section 263 and thereby disallowing the claim of depreciation and investment allowance. 21. We have heard the rival submissions in the light of the material placed before us and the precedents relied upon. It is a cardinal principle of law ; that law suits be not protracted otherwise great oppression might be done under the colour and pretence of law. This idea is inculcated in a well known Latin dictum: " INTERERT REPUPLICA UT SIT FINIS LITUM " In the case of Parashuram Pottery Works Co. Ltd, the Apex Court has held that State issues should not be reactivated beyond a particular stage and the lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other sphere of human society. 22. In order to find out the time lag between the orders passed under section 143(3) and under sect....
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..... 1973-74 29-3-1974 27-2-1991 26-3-1993 19 years. 1974-75 20-11-1974 27-2-1991 26-3-1993 18 yrs.4. mths. 1975-76 05-10 1977 27-2-1991 26-3-1993 15 yrs. 5 mths. 1976-77 19-01-1979 27-2-1991 26-3-1993 14 yrs. 2 mths. 1977-78 26-09-1980 27-2-1991 26-3-1993 12 yrs. 6 mths. THE TATA POWER CO. LTD. 1972-73 20-3-1973 27-2-1991....
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....of limitation originally laid down in that section had not expired before 1-10-1984. In order to avoid controversy and litigation in the matter of CBDT vide its Circular No. 402 dated 1-11-1984 rendered direction to the revenue authorities; we reproduce the text of the circular here as under : " Circular No. 402, dated November 1, 1984 Subject : Taxation Laws (Amendment) Act, 1984 - Amendment of section 263 of the I.T. Act, 1961 - Clarification regarding As a consequence of the amendment of section 263 of the Income-tax Act, 1961, by section 47 of the Taxation Laws (Amendment) Act, 1984, the limitation for passing an order under section 263 will, in view of general principles of interpretation of statutes, stand extended in cases where the period of limitation originally laid down in that section had not expired before 1-10-1984. However, with a view to avoiding controversy and litigation in the matter, it is desirable that orders under section 263 of the Income-tax Act are passed, as far as possible, within two years of the order sought to be revised in cases where the order sought to be revised was passed before 1-10-1984. Sd/- Kalyan Chand, Under Secretary, ....