Law:

Section:

Section 33 of the Income-tax Act, 1961 - Development Rebate - Whether for purpose of allowance of development rebate under section 33, no reserve needed be created by assessee if assessee did not have any assessable profits during year of account - Held, yes - Whether assessee was entitled to carry forward of development rebate for assessment years under review to subsequent years even though no reserve was created by it in previous years as provided in section 34(3)(a) - Held, yes FACTS The Tribunal held that the assessee was entitled to development rebate under section 33(1)(b) for the assessment years under review and that it should be carried forward to the subsequent years for allowance though no reserve was created by the assessee in the previous years as provided in section 34(3)(a). The Tribunal further held that for the purpose of the allowance of development rebate under section 33, no reserve needed be created by the assessee if the assessee did not have any assessable profits during the year of accounts. On reference: HELD It is now settled by a devision of the same High Court in Radhika Mills Ltd. v. CIT[1969] 74 ITR 661, that if there is no total income or if there is a loss, there can be no allowance of development rebate but it has to be carried forward to the following year. The carry forward of the development rebate is allowed only if the failure to create a reserve on the part of assessee is on account of the fact that there is no income available in the assessee's hands in the relevant year out of which the requisite reserve or any part of it could actually be created. In view of this settled position of law, the order of the Tribunal was justified. Note: The case was decided in favour of the assessee. CASE REVIEW Radhika Mills Ltd. v. CIT [1969] 74 ITR 661 (Mad.) and Indian Oil Corporation Ltd. v. S. Rajagopalan ITO [1973] 92 ITR 241 (Bom.) followed and relied upon. CASES REFERRED TO Radhika Mills Ltd. v. CIT [1969] 74 ITR 661 (Mad.) and Indian Oil Corporation Ltd. v. S. Rajagopalan, ITO [1973] 92 ITR 241 (Bom.). K.V. Nalini Chidambaram and C.V. Rajan for the Applicant. Subramaniam, S. Seshadri, T.R. Rajagopalan and S. Srinivasan for the…

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