Case: Commissioner of Income Tax Vs. Atlas Copco (India) Limited

This appeal is preferred against the judgment of the Bombay High Court dismissing an application filed by the Revenue under(2) of section 18 of the Companies (Profits) Surtax Act, 1964. The question raised by the Revenue reads as follows"Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling in the order of the Commissioner passed under section 16(1) of the Surtax Act, 1964, as without jurisdiction ?"assessment year concerned inthe previous year being the calendar year 1971The case of the Revenue is this : on the first day of the previous year, the assessee had a certain amount of general reserve. During the said previous year, an amount of Rs. 5, 53, 041 was utilised out of the general reserve for issuing bonus shares. TheOfficer added the amount representing bonus shares to the capital base of the company and made an assessment under the Act. An appeal was preferred by the assessee against the assessment order on some other points. The appeal was disposed of. At that stage, the Commissioner invoked his power under section 16(1) of the Act and revised the order of theOfficer. He deleted the said amount representing the bonus shares from out of the capital. Against this order, the assessee filed an appeal before theAppellate Tribunal. The Tribunal allowed the appeal holding that inasmuch as theOfficers order was theof an appeal before the Appellate Assistant Commissioner, the Commissioner had no jurisdiction to revise that order. The Revenue sought to question the said view of the Tribunal by obtaining a reference

Reasoning: The Revenue says that this section corresponds to section 263 of theAct, 1961, before it was amended by the Finance Act, 1988, and the Finance Act, 1989. Even under the unamended section 263, the Revenue says, it has been held that where an appeal is preferred by the assessee to the Appellate Assistant Commissioner from an order made by theOfficer in respect of only some of the items formed by theOfficers order and the remaining items forming part of theOfficers assessment order were not agitated before the Appellate Assistant Commissioner nor did he pronounce thereupon, the filing of the appeal does not bar the jurisdiction of the Commissioner in respect of the items not appealed against and not pronounced upon by the Appellate Assistant Commissioner. Reliance is placed upon a decision of the Andhra Pradesh High Court in CIT v. East Coast Marine Products P. Ltd. The same principle should hold good here, says counsel, for the Revenue