HINDUSTAN MALLEABLES AND Vs. INCOME TAX OFFICER AND ANOTHER

JUDGEMENT

(1.) This is a petition by the assessee -company under articles 226 and 277 of the Constitution of India. The petitioner seeks a writ of certiorari or other appropriate writ or order or direction for quashing the order of rectification of annexures 2 and 4 . The order of rectification at annexure 2 was passed by the Income Tax Officer (Special Circle), Dhanbad, under Sec. 154 of the Income Tax Act, 1961 (briefly the Act ), on 18th December, 1973. By that order, he rectified the mistake in the assessment order dated December 30, 1969, for the assessment year 1965 -66. His order was upheld by the Commissioner of Income Tax in revision under Sec. 264 of the Act. The order of the Commissioner dated January 25, 1975, is annexure 4 to this writ petition. The facts in brief are these. The petitioner was previously a private limited company and was admittedly converted into a public limited company with effect from February 24, 1961. It derives its income from manufacture and also from malleable cast iron, forged fittings, etc. The petitioner in its original return filed on September 30, 1975, claimed deduction under Sec. 84(2) of the Act amounting to Rs. 78,247. The relevant portion of Sec. 84 is :

(2.) This claim by the petitioner was disallowed by the Income Tax Officer on January 31, 1967, at the time of the original assessment made under Sec. 143(3) of the Act, but the order was set aside on appeal by the Appellate Assistant Commissioner with a direction to consider the claim of the petitioner under Sec. 84(2) of the Act afresh and for reassessment after giving the assessee an opportunity of being heard. Thereafter, the assessee was heard and reassessment was made. The exemption, however, claimed under Sec. 84(2) of the Act was again disallowed by Mr. G. Prasad, the then Income Tax Officer, W/A Dhanbad, by order dated December 30, 1969, at annexure I , on the ground that the assessee -company was formed by the reconstruction of the previous private company. The Income Tax Officer while rejecting the aforesaid claim observed as follows :

(3.) This exemption is not allowable to a company which is formed by the splitting up or the reconstruction of the business already in existence. The assessee -company was previously a private limited company and was converted into a public limited company effect from 24 -2 -61. Since it is not an entirely new industrial undertaking, rather reconstruction of a previous private company, hence the assessees claim of deduction u/s. 84(2) is rejected.