- (1.) The assessee has moved this appeal against the order passed by the CIT (A) by which the benefit of set-off of unabsorbed terminal depreciation was withdrawn.
(2.) The assessee-company was carrying on the business of coal mining which was nationalised on 1-5-1972 under the Cooking Coal Mines (Nationalisation) Act, 1972. The amount of compensation received by the assessee in respect of its business assets taken over by the Central Government fell short of their written down value. So, the assessee claimed the loss as terminal depreciation under section 32(1) (iii) of the Income-tax Act, 1961. From the order of assessment for the assessment year 1980-81 it is clear that the assessee claimed adjustment of unabsorbed depreciation and loss for the earlier years which could not be allowed as no such depreciation or loss could be determined in the earlier years. Against the said observation of disallowance the assessee preferred an appeal before the CIT (A). By order dated 14-8-1984 the matter was remanded by the first appellate authority to the Assessing Officer with a direction to sort out the issue from the assessment year 1973-74 taking into consideration the legal aspect of this issue. It appears that the Assessing Officer by order under section 251 dated 27-3-1987 pursuant to the direction of the CIT (A) determined the unabsorbed depreciation amounting to Rs. 1,50,550 and allowed the same to be deducted from the income of the assessee. The Assessing Officer, while passing the said order, considered the depreciation under section 32(1) of the Act and accordingly allowed the same to the carried forward. Subsequently, the Assessing Officer initiated proceeding under section 154 of the Act to withdraw the benefit of set-off of unabsorbed terminal allowance taking into consideration the provision of section 32(2) of the Act, which does not provide for carry-forward of unabsorbed terminal allowance. Being aggrieved by the said order, the assessee moved before the CIT (A) and by order dated 21-9-1990 the appeal was dismissed. Being still aggrieved, the assessee has moved before the Tribunal.
(3.) On behalf of the assessee, it was contended that the proceeding under section 154 initiated by the Assessing Officer was bad in law. Shri A. K. Banerjee appearing on behalf of the assessee vehemently argued that under given circumstances the Assessing Officer could not have initiated proceeding under section 154 while the point at issue was a debatable one. In this connection, reliance was placed upon the decisions in CIT v. Indian Steel & Wire Products Ltd., 1991 192 ITR 252 R and Oriental Cotton Corpn. & Mills Ltd. v. CIT, 1993 202 ITR 370 . It was further submitted on behalf of the assessee that section 32(2) or any other provision of the Act does not specifically put a bar on the carry-forward and set-off of balancing allowance under section 32(1) (iii). It was further contended on behalf of the assessee that the order passed by the Assessing Officer initially was merged with the order of the CIT (A) dated 14-8-1984 and so the same order could not be rectified subsequently by the Assessing Officer by an order under section 154 of the Act.;