Income‑tax‑‑‑

‑‑‑‑‑Surtax‑‑‑Rectification of mistakes‑‑‑Notice‑‑‑Notice based on High Court judgment‑‑‑Notice was valid‑‑‑Indian Companies (Profits) Surtax Act, 1964, S.13 & Sched. II.

Held, that the notice for rectification was based on the decision of the Bombay High Court in CIT v. Zenith Steel Pipes Ltd. (1978) 112 ITR 215. Since the notice was obviously based on a mistake, which the concerned Authority felt had been committed in the assessment order, it was perfectly legal. However, it was open to the petitioner to approach the concerned Authority and canvass the contention that the difference in the depreciation values which would be referable to rule 1, sub‑rule (iii), of the Second Schedule to the Companies (Profits) Surtax Act, 1964, would be for that particular year only.CIT v. Zenith Steel Pipes Ltd. (1978) 112 ITR 215 (Bom.) ref.

P.P.S. Janarthana Raja for Petitioner.

S.V. Subramaniam for C.V. Rajan for Respondent.

JUDGMENT

The present petition arises out of a notice issued under section 13 of the Companies (Profits) Surtax Act, 1964. The notice has been sent by the Deputy Commissioner of Income‑tax (Special Range).

On the basis of the returns filed by company, an order came to be passed the Inspecting Assistant Commissioner of Income‑tax (Assessment), Range II, Madras 34, dated April 16, 1987; wherein the deduction of Rs.1,16,16,134 was shown relying on rule 1 (iii) of the Second Schedule of the present Act. In that, the concerned officer had relied on a ruling of the Bombay High Court in the case of CIT v. Zenith Steel Pipes Ltd. (1978) 112 ITR 215. In the said order, this figure of Rs.1,16,16,134 was arrived at on the basis of the difference between book depreciation and the depreciation allowed by the Department for the years from 1976‑77 to 1983‑84. It seems that the excess values were added up both in the case of the values reflected from the account books, and the values reflected from the assessment orders. The' difference in these totals was arrived at Rs.1,16,134 and that figure was used for applying rule 1(iii) of the Second Schedule to the Act. The said authority thereafter, however, realized that the figure was not correct and issued, the above mentioned notice, whereby, it is suggested that the written down value as per the books as on October 1, 1982, was Rs.10,00,33,000 while the written down value of the assets as per the assessment as on October 1, 1982, was Rs.6,21,85,351 the difference being Rs.3,78,47,649. This amount should have been deducted from the capital base instead of Rs.1,16,16,134 which was deducted in the assessment. The authority concerned treated it as a mistake apparent from the records and called for the explanation of the petitioner. The petitioner challenges the said notice on the ground that the concerned authority had no jurisdiction to issue such a notice.

According to learned counsel, the provision under which this notice is given, i.e., section 13 would be applicable only where the authority concerned has to rectify any mistake which is apparent from the record and not otherwise. According to learned counsel, there is nothing in the notice to suggest that there was any apparent mistake in the assessment order passed. According to learned counsel, though that order by itself was not correct in law, the present notice also was not passed on sound footing as the formula shown by the authority concerned itself would not apply on a correct interpretation of rule 1(iii) of the Second Schedule to the Act.

Learned counsel appearing on behalf of the Department, however, It is apparent that the concerned authority has issued the notice basing it on the aforementioned reported ruling. Instead of approaching the said authority by way of proper reply and pointing out that the notice was or was not correct, the petitioner has chosen to rush before this Court, and in the process, nine long years have elapsed. There would be no point i6 going into the correctness or otherwise of the notice at this stage, because that would be the task of the concerned authority. However, it is clarified that it is open to the petitioner to approach the said authority and canvass the contention that the difference in the depreciation values which would be referable to rule 1, sub‑rule (iii), of the Second. Schedule to the Act would be for that particular year only. Since the notice is obviously based on a mistake, which the concerned authority feels has been committed in the assessment order, it was perfectly legal for the authority to issue the notice. The petitioner would now approach the concerned authority with his reply and canvass the question on the merits there. The authority would be well advised to dispose of the matter as early as possible. With these observations, the writ petition is disposed of without any costs.

M.B.A./385/FCOrder accordingly.