Law:

Section:

Section 33 of the Income-tax Act, 1961 - Development rebate - Carry forward and set off of unabsorbed - Assessment year 1973-74 - Whether in view of facts that in relevant assessment year assessee-company suffered losses and did not create any development rebate reserve, assessee was entitled to development rebate to be carried forward for being set off in assessment year in which assessee made profit or created requisite reserve - Held, yes FACTS During the assessment year 1973-74, the assessee-company suffered losses and claimed development rebate in respect of its machinery. The ITO disallowed the assessee's claim on the ground that no development rebate reserve had been created. However, on an appeal, the Commissioner (Appeals) held that the assessee was entitled to development rebate and directed the ITO to compute it and carry it forward. On appeal by the revenue, the Tribunal upheld the order of the Commissioner (Appeals). On reference: HELD In view of the decision in the case of Acropolymers (P.) Ltd. v. CIT [1985] 151 ITR 158 (Punj. & Har.), where it was held that where the total income had been computed before allowing development rebate and there is a loss, there is no legal obligation to create any statutory reserve in that year as no development rebate is actually to be allowed in that year and that the assessee could not, on that account, be denied the benefit of development rebate in the subsequent assessment years when profit is made and such a reserve is created. In the instant case, the Tribunal was justified in holding that the assessee was entitled to development rebate and the same be carried forward for being set off in the assessment year in which the assessee made profits and created requisite reserve. CASE REVIEW Acropolymers (P.) Ltd. v. CIT [1985] 151 ITR 158 (Punj. & Har.)followed and relied upon. CASES REFERRED TO Acropolymers (P.) Ltd. v. CIT [1985] 151 ITR 158 (Punj. & Har.). Ashok Bhan and Ajay Mittal for the Applicant. Adish Gupta for the Respondent. JUDGMENT Sodhi, J. - The matter…

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