In pursuance of the directions of this Court in T.C.P. No. 198 of 1984 dated 29th January, 1985, the Tribunal has referred the following question of law for our consideration under s. 256(2) of the IT Act, 1961.

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding and had valid materials to hold that the reassessment made under s. 147(b) of the IT Act was without jurisdiction and, therefore, invalid ?"

The assessee filed its return for the asst. yr. 1976-77 and claimed extra depreciation in respect of certain plant and machinery which were leased out to Spencer & Co., which is running a hotel, approved by the Central Government. The assessee claimed extra depreciation allowance at 50 per cent of the normal depreciation under item No. III, Part I of Appendix I to the IT Rules, 1962. The ITO in the original assessment for the year 1976-77 granted the extra depreciation as claimed by the assessee. Subsequent to the completion of the original assessment, the audit party had drawn to the attention of the ITO that the initial depreciation was wrongly allowed as the assessee has only leased out the assets belonging to it and the same