Satish Chandra, J. - (1.) DURING the previous year relevant to the assessment year 1966-67, the petitioner-company installed machinery to commence manufacture of Nylon-6. The petitioner-company claimed that this was a petro-chemical industry to which Section 33(i)(b)(B)(i) of the Income-tax Act, 1961, was applicable. It was a priority industry and was entitled to depreciation under Section 80E of the Act. The Income-tax Officer examined this claim and finding that the petitioner-company was engaged in petro-chemical industry upheld the claim. It allowed 35 per cent. development rebate under Section 33(1)(b)(B)(i) and also allowed depreciation at 15 per cent. under Section 80E of the Act for the assessment year 1967-68. Since some of the deductions claimed by the assessee had been disallowed, the assessee riled an appeal which was partly allowed by the Appellate Assistant Commissioner on 14th December, 1972, with the result that the assessment was modified.
(2.) ON 20th December, 1973, the Additional Commissioner of Income-tax served a notice upon the assessee intimating that it intended to revise the order of the Income-tax Officer for the assessment year 1967-68, on the ground that the said order was prejudicial to the interest of the revenue inasmuch as it granted development rebate at the rate of 35 per cent. instead of 20 per cent. and depreciation under Section 80E was also wrongly allowed. According to the Commissioner the petitioner-company was not a priority industry. At the hearing before the Commissioner the assessee took a preliminary objection that since the Income-tax Officer's order had merged in the appellate order of the Appellate Assistant Commissioner, the Commissioner had no jurisdiction under Section 263(1) of the Act to revise the same. The Commissioner overruled this objection, primarily on the strength of the decision given by the Gujarat High Court in Karsandas Bhagwandas Patel v. Income-tax Officer, [1975] 98 ITR 255 (Guj). Proceeding on the merits, the Commissioner held that the petitioner-company was not engaged in petro-chemical industry and was hence not entitled to the deductions. Accordingly, the assessment order was appropriately modified. Aggrieved, the petitioner has come to this court under article 226 of the Constitution.
(3.) MR. S.C. Khare, appearing for the petitioner, has reiterated the preliminary objection raised before the Commissioner that he had no jurisdiction to touch the order of the Income-tax Officer after it had merged in the appellate order. In the assessment order the Income-tax Officer observed that: "The assessee has claimed that in view of the provisions of Section 33(1)(b)(B)(i) of the Income-tax Act, 1961, it was entitled to development rebate at the rate of 35 per cent. as the company was covered by item No. 18 of the Fifth Schedule. In support of this claim of the assessee, the assessee referred to the case of M/s. Nirlon Synthetics Fibre and Chemical Ltd., Bombay, and stated that the factory was manufacturing nylon yarn from caprolactum and was being allowed this benefit. The assessee's claim is allowed in view of the assertions made by it. The assessee has also claimed that in view of the same fact the benefit under Section 80-I should also be allowed. The claim as made by the assessee is allowed. " ;