- (1.) The Commissioner of Income Tax, Lucknow (the Revenue) having obtained special leave of this court in Special Leave Petition (Civil) No. 3204 of 1977 by order dated 21/2/1978, has filed the Civil against the order of the Allahabad High court dated 1/8/1977, rendered in ITA No. 194 of 1977 rejecting the application filed by the Revenue under Section 256 (2 of the Income Tax Act (hereinafter referred to as the Act). The Revenue required the Income Tax Appellate tribunal, Allahabad bench, to refer the following question of law under Section 256 (1) of the Act for the decision of the High court: "Whether the tribunal was in law justified in holding that the amendment order made by the ITO was not sustainable to the extent to which it purported to withdraw development rebate admissible to the assessee in respect of that part of the machinery/plant which was the subject- 702 matter of the hiring agreement dated 27/8/1969. " (emphasis supplied) The Appellate tribunal rejected the said application by order dated 20/10/1976. It is thereafter the Revenue filed the application under Section 256 (2 of the Act before the High court, which was rejected by order dated 1/8/1977.
(2.) The facts of this case are in a narrow compass. The respondent-assessee is a registered firm. It carried on the business of manufacture of "milk powder". We are concerned herein with the Assessment Year 1965-66. For the said year, the Income Tax Officer, by order dated 29/6/1968, allowed development rebate for the entire machinery and plant owned by the assessee and used for the said business in the sum of Rs. 1,00,093. 00. A part of the machinery was subsequently sold. The machinery that was left entitling the assessee to the development rebate for the said year was determined at Rs. 85,222. 00. This machinery was let out by the assessee on 27/8/1969 to M/s Hindustan Lever Limited for a period of three years with a provision for further renewal of the agreement or for outright purchase. In the circumstances, the Income Tax Officer, by an amendment order dated 30/3/1970, withdrew the development rebate of Rs. 1,00,093. 00. The appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner. In further appeal before the Income Tax Appellate tribunal, it was contended that there was no 'sale' or 'transfer' within the meaning of Section 34 (3) (b) of the Act, permitting withdrawal of the development rebate of Rs. 1,00,093. 00 granted earlier and in this view the amendment order passed by the Income Tax Officer was improper and unjustified. The Appellate tribunal followed its earlier decision rendered for the Assessment Year 1970-71 and held that no transfer was involved by the lease agreement and so Section 34 (3 (b) of the Act was not attracted. The appeal filed by the assessee was allowed. Thereafter the Revenue required the Appellate tribunal in RA No. 13] of 1976-77, to refer the question of law formulated hereinabove for the decision of the High court. The tribunal declined the request of the Revenue and the application filed by the Revenue before the High court also met with the same fate. It necessitated the Revenue to approach this court by special leave. After obtaining special leave in Special Leave Petition (Civil) No. 3204 of 1977, the above appeal has been filed.
(3.) We heard counsel. The original assessment order for the year 1965-66 was rendered on 29/6/1968. The amendment order withdrawing the development rebate was passed by the Income Tax Officer on 30/3/1970. In view of the pendency of the matter for over two decades we intimated counsel on both sides that we propose to finally adjudicate the matter and in that behalf, we withdraw the entire matter from the High court, to this court.;