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Issues:
1. Whether the Tribunal was justified in sustaining the Appellate Assistant Commissioner's direction regarding weighted deduction under section 35B of the Income-tax Act, 1961? 2. Whether the assessee was entitled to the development rebate of Rs. 2,23,811 claimed by them or only to the amount of Rs. 29,841? Analysis: Issue 1 The High Court considered the first issue regarding the weighted deduction under section 35B of the Income-tax Act, 1961. The Court referred to a previous decision involving the same assessee and concluded that the Tribunal was justified in sustaining the Appellate Assistant Commissioner's direction. The Court answered the question in the affirmative and in favor of the assessee based on the previous decision. Analysis: Issue 2 Regarding the second issue of entitlement to development rebate, the Court examined whether the assessee was entitled to the claimed amount of Rs. 2,23,811 or only to Rs. 29,841. The assessee had purchased new machinery worth Rs. 14,92,073 and should have created a development rebate reserve of Rs. 2,23,811 based on 15% of the machinery's value. However, the assessee only created a reserve of Rs. 29,841. The assessee argued that the lower amount was a mistake and intended to create a reserve of Rs. 2,98,414, equivalent to 20% of the machinery's value. The Court examined circulars issued by the Central Board of Direct Taxes and clarified that the assessee did not follow the correct calculation method as required by law. The Court held that the circular's benefit was not available to the assessee due to the incorrect calculation, and upheld the Tribunal's decision on different grounds. Therefore, the Court answered the question in the affirmative and against the assessee. In conclusion, the High Court upheld the Tribunal's decision on both issues, ruling in favor of the assessee regarding the weighted deduction under section 35B but against the assessee concerning the development rebate entitlement.
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