CHITTOOR TRANSPORT CO PR LIMITED Vs. INCOME TAX OFFICER CHITTOOR
HIGH COURT OF ANDHRA PRADESH
CHITTOOR TRANSPORT CO.PR.LTD.
INCOME-TAX OFFICER, CHITTOOR
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Chandra Reddy, C.J. -
(1.) The interpretation and the validity of Sec. 10 (2) (vi) (b) of the Indian Income-Tax Act, (XI) of 1922) are involved in this Writ Petition .
(2.) This is how the two questions arise in this enquiry. One C. P. Sarathy and his two sons owned all the shares in a private limited company carrying on business in Motor Transport Co. (Private) Ltd. , Chittoor by its Director, C. P. Doraiswamy. This company obtained a development rebate for the assessment year in a sum of Rs. 48,600.00. In the course of that year, the three share-holders entered into a partnership on 27-5-1959 to take over certain assets of the company. Recognition to this partnership was accorded by the Department under Sec. 26-A of the Indian Income-Tax Act. Pursuant to the terms of the partnership, some of the transport vehicles in regard to which rebate was granted were transferred by the company to the partnership for a consideration of Rs. 2,52,000.00. This led the proper Income-Tax Officer to act under Sec. 35 (11) of the Income Tax Act to recompute the total income of the company, i.e. , the petitioner before us, by way of rectification of mistake apparent from the record within the meaning of that Section read with Sec. 10 (2) (vi) (b) . The Income-tax Officer called upon the assessee to show cause why the development rebate allowed to the company should not be included in a computation of the income of the assessee for the assessment year. Having failed in its attempt to induce the Department to withdraw that notice, the company invoked the jurisdiction of this Court under Art. 226 of the Constitution .
(3.) The action of the Department is assailed by the petitioner on two grounds ; (1) that in the instant case there was no sale or transfer within the contemplation of the proviso to Sec. 10 (2) (vi) (b) and (ii) that the proviso is violative of the equality clause enshrined in Art. 14 of the Constitution .;
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