Sabyasachi Mukharji, J. - (1.) In this reference, under Section 256(1) of the I.T. Act, 1961, the following questions have been referred to this court : "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the issue of disallowance under Section 40(a)(v) was not the subject-matter of an order by the Appellate Assistant Commissioner and hence the Commissioner of Income-tax had the jurisdiction under Section 263 on this issue ?
(2.) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that even if the second part of Section 40(a)(v) was not mentioned by the Commissioner of Income-tax in the notice under Section 263 specifically, it was not precluded from considering the whole of the section ?
(3.) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the Commissioner of Income-tax was justified in setting aside the order of the Income-tax Officer on the issue of disallowance under Section 40(a)(v) ?" 2. In order to appreciate the questions, it would be necessary to refer to the order of the ITO for the relevant assessment year, being the assessment year 1970-71, which was passed on the 24th March, 1973. In that order, the ITO observed, on the question of depreciation, as follows : "4. In all the past assessments depreciation on bungalows are being allowed @ 21/2% only while the assessee has been claiming @ WDV for bungalow for the assessment year -------------------------------------------------------------------------------- Rs. Year 1969-70 1,93,89,649 Less : Rs. Dep. allowed @ 2% 4,78,955 W.D.V. for 1970-71 1,89,10,694 Dep. admissible @ 2% on above 4,72,766 -------------------------------------------------------------------------------- Amount claimed @ 5% as per details furnished in statement under Section 40(a)(v) is Rs. 7,88,109 ; balance inadmissible is Rs. 3,15,343." 3. As appearing from the order of the ITO, the assessee had claimed depreciation on the bungalows at 5 per cent. but was allowed depreciation at 21/2 per cent. But the ITO had noticed that the amount claimed was 5 per cent. as per details. Therefore, the amount inadmissible under Section 40(a)(v) would be Rs. 3,15,343 calculating on the basis of depreciation allowed at 5 per cent.;