Law:

Section:

Section 33, read with section 34, of the Income-tax Act, 1961 – Development rebate – By virtue of an agreement with State Government, assessee was under obligation to set aside each year a minimum sum in ‘Renewals & Replacement Reserve account' – However, to that account, assessee credited an amount which exceeded amount stated in said agreement – Whether since statutory agreement itself provided that a larger sum may also be deposited under "Renewals and Replacement Account", excess sum could not be held to be a compliance with conditions of section 34(3)(a) – Whether since a sum had been set apart in balance sheet towards 'development rebate reserve account' under head 'Special accounts', by implication, such amount could not be held to be included in 'general reserve' – Held, yes – Whether, therefore, credit of sum to 'Renewals and Replacement Reserve Account' did not constitute credit to 'reserve account' as contemplated under section 34(3) so as to justify allowance of development rebate under section 33 – Held, yes FACTS Under an agreement with the State Government, the assessment-company was under an obligation to set aside at least a sum of £ 80,000 in the 'Renewals and Replacement Reserve Account' every year. The assessee, however, set aside £ 1,00,000 under the head 'Renewals and Replacement Account' Thus, although only a sum of £ 9,473 was to be set apart as development rebate reserve under section 34(3)(a), an excess amount of £ 20,000 was lying credited in the 'Renewals and Replacement Account'. The assessee contended that admittedly, for the purpose of getting development rebate under section 34(3)(a), the specific amount equal to 75 per cent of the development rebate to be actually allowed, was to be utilized for the purpose of its business subject to the exceptions mentioned in the said section and any amount set apart in the "Renewals and Replacement Account" could naturally be used for the purpose of the business of the assessee. It, thus, claimed that the conditions under section 34(3)(a) having been complied with, the assessee was entitled to development rebate under section 33. The Tribunal rejected the assessee's contention. On…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492