1. ' The Revenue has filed these appeals against the judgment of the Madras High Court, dated November 2, 1977, in T.C. Nos.147, 146, 171 and 240 of 1974. The appeals have been filed on the basis of certificate of fitness granted by the High Court under section 261 of the Income Tax Act, 1961 (hereinafter referred to as the Act"). The High Court has, however, granted certificate to the Revenue only in respect of the judgment in T.C. No,147 of 1974 because the questions referred in that case alone were answered against the Revenue. In the other three tax cases the questions referred were answered in favour of the Revenue and certificate of fitness was granted to the assessee. Under a misapprehension appeals have also been filed by the Revenue against the judgment in Tax Cases Nos.146, 171 and 240 of 1974. The said appeals are dismissed as not maintainable. We would confine ourselves to the appeal against the judgment in Tax Case No,147 of 1974 wherein the following two questions were referred to the High Court for its opinion by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"):
(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that there was no mistake apparent from record in the grant of development rebate and that the Income-tax Officer had no jurisdiction to pass a rectification order under section 155(5) of the Income Tax Act, 1961, to withdraw the development rebate allowed therein?
2. (2). Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Income-tax Officer's rectification order was really one under section 155(5) of the Income Tax Act, 1961, and that, therefore, the assessee's appeal against such order was competent and maintainable in law?"
3. ' The questions relate to the assessm ent years 1960-61 and 1961-62.
4. ' Dalmia Magnesite Corporation, Salem, the assessee herein, was a partnership firm having been constituted on November 7, 1956. Originally it was having three partners, namely, (1) Orissa Cement Ltd., (2) Dalmia Cement Ltd-and (3) Magnesite Corporation of India Ltd. Each partner had one third share. The firm was established as an industrial undertaking for prospecting magnesite ores and manufacture of lead burnt magnesite. Production commenced on January 1, 1959. The previous year for the assessm ent year 1960-61 was the period from July. 1, 1958, to June 30, 1959. On June 16, 1959, there was a change in the constitution of the firm and two of the partners. Viz., Orissa Cement Ltd. And Dalmia Cement Ltd. Retired from the firm and Dalmia Cement (Bharat) Ltd., became a partner. In the reconstituted firm, the share of Magnesite Corporation of India Ltd., continued to be one-third while that of Dalmia Cement (Bharat) Ltd. Was two thirds. Under a scheme framed by the Madras High Court by order, dated November 16, 1962, in Company Petition No,46 of 1962, the assets of Magnesite Corporation of India Ltd. Came to be vested in Dalmia Cement (Bharat) Ltd., and Magnesite Corporation of India Ltd., became a wholly owned subsidiary of Dalmia Cement (Bharat)
5. Ltd., with effect from January 1, 1963. As a result the shareholding of the partners in the assessee- firm changed and the share of Magnesite Corporation of India Ltd. Was reduced to one-tenth while that of Dalmia Cement (Bharat) Ltd. Was increased to nine-tenths. A scheme for amalgamation of the two companies (partners in the assessee-firm) was submitted before the Madras High Court in Company Petition No,27 of 1964 filed under section 394 of the Companies Act, 1956. The said scheme was approved by the High Court by order, dated July 1Q, 1964, with effect from January 1, 1964. Under the said scheme, the undertaking of Magnesite Corporation of India Ltd. Vested in and became the property of Dalmia Cement (Bharat) Ltd., as on and from January 1, 1964, and Magnesite Corporation of India Ltd. Without, winding up, stood dissolved on January 1, 1964. The assessee had obtained the benefit of development rebate during the assessment years 1960-61 and 1961-62 under the section 10(2)(vi-b) of the Income-tax Act, 1922. On December 23, 1967, the Income-tax Officer in exercise of his powers under section 155(5) of the Act passed orders withdrawing the development rebate that was allowed to the assessee in respect of the assessm ent years 1960-61 and 1961-62. The said order was affirmed by the Appellate Assistant Commissioner on appeal. On further appeal the Tribunal decided in favour of the assessee on the view that there was no mistake apparent from the record in the grant of development rebate and that the Income-tax Officer had no jurisdiction to pass a rectification order under section 155(5) of the Act to withdraw the development rebate allowed therein. At the instance of the assessee, the two questions mentioned above were referred by the Tribunal to the High Court for its opinion.
6. While dealing with the first question the High Court has held that in order that clause (i) of subsection (5) of section 155 of the Act may be attracted there must be a sale or a transfer of the plant installed by the assessee and that such transfer must be by the assessee and that in the present case it could not be said that there has been a transfer by the assessee of the plant or machinery and that any change in the ownership of the assets had been effectuated by virtue of an order passed by the High Court in the company petition whereby the rights of one of his partners in the assets were vested in the other partner. According to the High Court this could, by no stretch of imagination, be treated as a transfer by the assessee of the plant and machinery and, therefore, section 155(5) could not be attracted and the order passed by the Income-tax Officer rectifying the original assessm ent order under section 155(5) was not sustainable. On the second question the High Court has held that in view of the specific provision made in section 155(5) for rectification of assessm ent orders, the said provision alone could be invoked and the general provision in section 154 of the Act was not applicable.
7. ' Dr. Gauri Shankar, learned senior counsel appearing for the Revenue, in support of the appeal, has urged that in the absence of the winding-up of Magnesite Corporation of India Ltd., the said company had continued to exist and, therefore, it could not be said that the assessee had ceased to exist on January 1, 1964. The said contention of learned counsel, however, runs against paragraph 8 of the scheme, approved by the Madras High Court in Company Petition No,27 of 1964, whereunder it is stated thus: "The Magnesite Corporation of India Ltd., will without winding up stand dissolved on the effective date."
8. ' The effective date was January I, 1964. In view of the said provision in the scheme Magnesite Corporation of India Ltd., stood dissolved on January 1, 1964. This provision in the scheme is not open to challenge in these proceedings. It must, therefore, be held that on January 1, 1964, only one partner of the assessee-firm., viz., Dalmia Cement (Bharat) Ltd. Was left and since a partnership could not continue with one partner the assessee-firm should be treated to have stood dissolved on January 1, 1964.
9. ' In the facts and circumstances of this case we do not find any infirmity in the impugned judgment of the High Court whereby the two questions referred to it for opinion have been answered against the Revenue on the basis that in view of the special provision for rectification of an assessment order contained in section 155(5) the general power or rectification contained in section 154 was not applicable and that the power under section 155(5) could not be invoked in the facts of the present case because there was no transfer of plant by the assessee-firm. The appeal, therefore, fails and is accordingly dismissed. No order as to costs.