Ruma pal, J. - (1.) The assessment years in question are 1982-83 and 1983-84. The subject-matter of challenge are two notices issued under Section 263 of the Income-tax Act, 1961, both dated February 16, 1987, seeking to revise the assessment for the assessment years in question on the identical ground. The ground stated is that the petitioner had made a donation of Rs. 3 lakhs during the relevant financial year to K.M. Scientific Research Centre and got the benefit of Section 35(1)(ii) for the assessment year in question. It has further been stated that the approval allowed to the research centre had been withdrawn with retrospective effect from January 17, 1980, by the Government of India by a notification dated January 2, 1986, and that the benefit had been allowed wrongly to the petitioner-company in the assessment for the assessment year by the Inspecting Assistant Commissioner.
(2.) The petitioner has contended that the basis of the notices is invalid as there could be no retrospective cancellation of approval. Reliance has been placed on the decision of a learned single judge of the Bombay High Court in Seksaria Biswan Sugar Factory Ltd, v. IAC [1990] 184 ITR 123 in this connection, ITO v. M.C. Ponnoose and Babul Cashew Co. v. STO. The respondents have contended that the petitioner had an alternative remedy as the Commissioner could decide the issue raised. Reference has been made to CITv. Ramendra Nath Ghosh. It is also contended that unless there was an initial lack of jurisdiction, the court should not interfere. Reliance has been placed on the decision in Samnuggar Jute Factory Co. Ltd. v. CIT and Simbhaoli Industries Pvt. Ltd. v. CIT. Thirdly, it is contended that a Division Bench of this court had held that proceedings for rectification under Section 154 were permissible on the basis of the retrospective amendment of the law. It is argued that if that is possible, proceedings under Section 263 should, by the same token, be permitted. The Division Bench judgment is CIT v. E. Sefton and Co. (P) Ltd. It is stated that the Commissioner could take the subsequent fact of the withdrawal of the notification into consideration while exercising powers under Section 263. It is submitted that the case of CIT v. S.M. Oil Extraction (P) Ltd. supported this submission. It is stated that the Commissioner's action would have to be judged with reference to the time when the Commissioner issued the impugned notices. As on that date there was no approval of the research centre, payment to the research centre did not entitle the petitioner to the benefit of deduction under Section 55 of the Act. Section 35(1)(H) reads as follows : "35. (1) In respect of expenditure on scientific research, the following deductions shall be allowed,--. . . (ii) any sum paid to a scientific research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research : Provided that such association, university, college or institution is for the time being approved for the purposes of this clause by the prescribed authority."
(3.) The notification dated August 20, 1981, reads as follows (see [1982] 133 ITR (St.) 18.) : "No. 4185 (F. No. 203/134/79-ITA.II) : In continuation of this office Notification No. 2739 (F. No. 203/197/78-ITA.II), dated March 1, 1979, it is hereby notified for general information that the institution mentioned below has been approved by the Indian Council of Agricultural Research, the prescribed authority for the purposes of Clause (ii) of Sub-section (1) of Section 35 of the Income-tax Act, 1961. INSTITUTION K.M. Scientific Research Centre, Masondha, Moti Nagar, Faizabad (U.P.) This notification is effective for a period of 3(three) years from January 17, 1980, to January 16, 1983.";