JEEWANLAL 1929 LTD Vs. INCOME TAX OFFICER J WARD
LAWS(CAL)-1976-2-31
HIGH COURT OF CALCUTTA
Decided on February 18,1976

JEEWANLAL (1929) LTD. Appellant
VERSUS
INCOME-TAX OFFICER, J-WARD Respondents





Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. CALCUTTA STEEL CO LTD [LAWS(CAL)-1985-1-28] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. PURTABPORE CO LTD [LAWS(CAL)-1985-7-25] [REFERRED TO]
PRAJATANTRA PRACHAR SAMITY VS. COMMISSIONER OF INCOME TAX [LAWS(ORI)-2003-1-1] [REFERRED TO]


JUDGEMENT

Sabyasaciii Mukharji, J. - (1.)The subject-matter of challenge in this application under Article 226 of the Constitution is the notice dated 9th July, 1973, issued under Section 154/155 of the I.T. Act, 1961, In order to appreciate the question involved in this application it would be necessary to refer to certain facts. The petitioner is a public limited company. The petitioner is engaged in the business of manufacture and sale of aluminium utensils and articles. One of the main businesses of the petitioner, according to the petitioner, consisted of export of aluminium utensils and articles and goods outside India. The petitioner is an exporter of aluminium goods and articles to countries outside India. By export of the said aluminium articles and goods the petitioner earned what is known as import entitlement. The petitioner sold the said import entitlement. I am concerned in this application under Article 226 of the Constitution with the question relating to the assessment year 1965-66. On the 18th March, 1970, the ITO made an assessment for the said year. In the assessment the petitioner had contended that the amounts realised by the petitioner from the sale of import entitlement were not income but capital receipts. The ITO negatived this contention. In this application, it is not necessary to refer to this aspect any further. It was contended alternatively that the petitioner was entitled to certain deductions as provided under Section 2(5)(a)(i) of the Finance Act, 1965, as the said receipts were income or profits derived from export of goods or merchandise out of India. The petitioner also contended that the petitioner was entitled to rebate under para. F(I)(b)(ii)(a) of Part I of the First Schedule to the said Finance Act, 1965. I will refer to the relevant provisions of the said clause. The petitioner contended that the income arising from the manufacture and sale of aluminium utensils are attributable to manufacture and production of aluminium so as to come within the relief granted by the said provision. The ITO, however, disallowed both these contentions. The assessee preferred an appeal before the AAC on 21st April, 1970, contending, inter alia, that the aforesaid two reliefs were wrongly not allowed by the ITO. On the 3rd February, 1972, the AAC of Income-tax disposed of the appeal. The AAC observed, inter alia, as follows : "1965-66.--The Income-tax Officer will check up this point and will allow such relief and rebate as may be admissible in law to the appellant on export sales and export profits."
(2.)The AAC, therefore, directed the ITO to examine the point and allow such reliefs as would be admissible in law to the petitioner. On 13th November, 1972, the ITO gave effect to the order of the AAC under Section 251 of the I.T. Act, 1961, and allowed the aforesaid reliefs to the petitioner. In passing the impugned order, the ITO, after making the tax calculation, observed, inter alia, as follows : JUDGEMENT_946_ITR118_1979Html1.htm
(3.)On the 9th July, 1973, the impugned notice was issued. In the said notice, the ITO indicated that the nature of the mistake proposed to be rectified were as follows: "1. Tax wrongly calculated at the rate applicable to priority income. 2. Export profit rebate wrongly allowed." 3. On the 20th July, 1973, the petitioner made the demand for justice by withdrawal of the said notice and on 23rd July, 1973, the petitioner moved this court under Article 226 of the Constitution and obtained the rule nisi and also an order of injunction. Thereafter, on the 4th November, 1974, the CIT issued another notice under Section 263 of the I.T. Act, 1961, in respect of the said order made by the ITO under Section 251. In the said notice, the Commissioner observed, inter alia, as follows :
"The Income-tax Officer while giving effect to the orders of the AAC allowed rebate on export profit amounting to Rs. 1,16,173 and Rs. 65,291 for the assessment years 1965-66 and 1966-67, respectively. In doing so, it appears that the ITO had overlooked the clear provisions of the Finance Acts, 1965 and 1966, to the effect that such rebate would be admissible only for the total income included in profits and gains derived from the export of any goods or merchandise outside India. Obviously, it appears to me that the Income-tax Officer has not correctly applied the provisions of the two Finance Acts. It is also seen that the Income-tax Officer applied the articles specified in Part III of the First Schedule of the Finance Act, 1965, i.e., aluminium, whereas the assessee was producing aluminium utensils from aluminium. This also appears to be an incorrect application of the Acts."

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