2010 Supreme(SC) 303

2010 (3) Supreme 61
SUPREME COURT OF INDIA
S.H. Kapadia and Swatanter Kumar, JJ.
M/S. Swaraj Engines Ltd. — Appellant
versus
Assistant Commissioner of Income Tax, Chandigarh & Anr. — Respondents
Civil Appeal No.8756 of 2003
Decided on : 6-04-2010

Headnote:Income Tax Act, 1961 - Section 80-I - Appellant-assessee a joint venture between Kirloskar Group and Government of State of Punjab claimed deduction under Section 80-I of Act, 1961 for the Assessment Year 1990-91, which, according to assessee, was the initial assessment year- The deduction was initially allowed by successive Assessing Officers for the initial Assessment Year 1990-91 and for six successive Assessment Years 1991-92 to 1996-97-Subsequently a notice under Section 154 was issued by Department purporting to withdraw Section 80-I deduction in respect of the Assessment Year 1997-98- Appeal thereagainst –Allowed in favour of assessee by CIT(A) -Soon thereafter, Department issued notice under Section 148 for the Assessment Year 1997-98 for the reason that in the Annual Report of assessee for Financial year 1988-89, relevant to Assessment Year 1989-90, assessee had indicated sales of 346 engines manufactured before 31st March, 1989-Taking into account said particulars of sales, notice stated that manufacturing/production of engines had allegedly started in the period, relevant to the Assessment Year 1989-90, and, consequently,assessee was not entitled to the benefit under section 80-I during the Assessment Year 1997-98 - This initiation of the re-assessment proceedings was challenged by way of a Writ Petition –Dismissed –Appeal-During the pendency of this Civil Appeal, against the order of the Assessing Officer reopening the assessment, assessee had preferred an Appeal - CIT(A) allowed deduction under Section 80-I for the Assessment year 1997-98 on the ground that assembling of engine did not amount to manufacture for purposes of claiming deduction under Section 80-I of the Income Tax Act, 1961- Against this decision of CIT(A), Department had preferred Income Tax Appeal which is still pending as of Date- In the above circumstances, in the ends of justice direction given to Income Tax Appellate Tribunal, to also examine this narrow issue regarding the validity of the notice in the pending Appeal-Inerim orders passed by Apex Court during pendency of this Civil Appeal will continue till disposal of pending Appeal by Tribunal-Appeal disposed of (Paras 3 to 6)

       Facts of the Case :

       Appellant- assessee a joint venture between Kirloskar Group and Government of State of Punjab claimed deduction under Section 80-I of Act, 1961 for the Assessment Year 1990-91, which, according to assessee, was the initial assessment year herein in the instant case. The deduction was initially allowed by successive Assessing Officers for the initial Assessment Year 1990-91 and for six successive Assessment Years 1991-92 to 1996-97-Subsequently a notice under Section 154 was issued by Department purporting to withdraw Section 80-I deduction in respect of the Assessment Year 1997-98. Appeal thereagainst was Allowed in favour of assessee by CIT(A) .Soon thereafter, Department issued notice under Section 148 for the Assessment Year 1997-98 for the reason that in the Annual Report of assessee for Financial year 1988-89, relevant to Assessment Year 1989-90, assessee had indicated sales of 346 engines manufactured before 31st March, 1989.Taking into account said particulars of sales, notice stated that manufacturing/production of engines had allegedly started in the period, relevant to the Assessment Year 1989-90, and, consequently,assessee was not entitled to the benefit under section 80-I during the Assessment Year 1997-98 . This initiation of the re-assessment proceedings was challenged by way of a Writ Petition which was Dismissed.

       2.Present appeal has been filed against said order of High Court.

       Findings of the Court :

       During the pendency of this Civil Appeal, against the order of the Assessing Officer reopening the assessment, assessee had preferred an Appeal . CIT(A) allowed deduction under Section 80-I for the Assessment ear 1997-98 on the ground that assembling of engine did not amount to manufacture for purposes of claiming deduction under Section 80-I of the Income Tax Act, 1961. Against this decision of CIT(A), Department had preferred Income Tax Appeal which is still pending as of Date. In the above circumstances, in the ends of justice direction given to Income Tax Appellate Tribunal, to also examine this narrow issue regarding the validity of the notice in the pending Appeal. Inerim orders passed by Apex Court during pendency of this Civil Appeal would continue till disposal of pending Appeal by Tribunal. Appeal was disposed of