Commissioner of Income Tax vs Fag Precision Bearing Ltd.

D.A. Mehta, J.—This Reference at the instance of revenue has raised the following question of law:

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in modifying the orders u/s 154 for assessment years 1990-91 and 1991-92?

The assessment years in question are 1990-91 and 1991-92. For both the years, unabsorbed investment allowance relatable to assessment years 1982-83 to 1989-90 was excluded by virtue of provisions of Section 115J of the Income Tax Act, 1961 [the Act]. The Assessing Officer accepted the return of income u/s 143(1)(a) of the Act and no prima facie adjustment was made. Subsequently, on 31-8-1992 orders were framed u/s 154 of the Act by the Assessing Officer placing reliance on Section 115J(2) of the Act as well as CBDT Circular No. 495 and the Assessing Officer disallowed unabsorbed investment allowance to the extent such amount was allowed to be carried forward and set off while computing the income u/s 115J of the Act.

The assessee carried matter in appeal before Commissioner (Appeals), but did not succeed. However, in Second Appeal Tribunal held that prima facie adjustments were permissible in respect of obvious and patent mistake. The Tribunal also referred to and relied upon Instruction No. 1814, dated 4-4-1989 issued by CBDT.

It is common ground between the parties that the controversy raised in the present Reference identical to the controversy raised in the case of Gujarat Petrosynthese Ltd. v. P.L. Rungta Special Civil Application No. 1245 of 1993. Hence, for the sake of brevity, it is not necessary to reiterate the respective contentions in detail.

Therefore, for the reasons stated in the judgment of even date rendered in the case of Gujarat Petrosynthese Ltd. (supra), the question referred for the opinion of this Court is answered in affirmative, i.e., in favour of the assessee and against the revenue.

Reference stands disposed of accordingly with no orders as to costs.