Law:

Section:

Section 33(2) of the Income-tax Act, 1961 - Development rebate - Carry forward and set off of unabsorbed rebate - Assessment year 1974-75 - Assessee claimed a deduction of Rs. 13,752 as unabsorbed development rebate, which he had carried forward from earlier assessment year 1973-74 - ITO disallowed assessee's claim on ground that in absence of a valid return no assessment was made for assessment year 1973-74 and, therefore, amount of development rebate was not quantified by authorities under Act and, therefore, assessee was not entitled to any carry forward of development rebate as claimed - Tribunal found that during assessment year 1973-74 assessee had created development rebate reserve to extent of Rs. 15,123 and in that year there was net loss of Rs. 34,751 and that during assessment year 1974-75 there was a profit of Rs. 20,006 and ITO had assessed income at Rs. 26,517 - Whether on these facts, Tribunal was justified in holding that assessee was entitled to carry forward unabsorbed development rebate related to assessment year 1974-75 - Held, yes FACTS For the assessment year 1974-75, the assessee claimed a deduction of Rs. 13, 752 as unabsorbed development rebate, which he had carried forward from the earlier assessment year 1973-74. The ITO rejected the assessee's claim on the ground that since the assessee had not filed a valid return for the assessment year 1973-74, no assessment of profit or loss of the assessee could be made for the assessment year 1973-74 and, therefore, there was no quantification of the development rebate admissible during this period and, thus, there was no occasion for carrying forward the unabsorbed development rebate as an admissible deduction from the income of the assessment year 1974-75. On appeal, the AAC upheld the order of the ITO. On second appeal, the Tribunal found (i) that during the assessment year 1973-74 (he assessee had created development rebate reserve in the profit and loss account to the extent of Rs. 15,123 and in that year there was net loss of Rs. 34,751, and (ii) that during the assessment year 1974-75 there was a profit of Rs. 20,006 and the ITO had assessed the income at Rs. 26,517. On these facts, the…

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