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Interpretation of relief under section 80-I of the Income-tax Act, 1961 based on development rebate and weighted expenditure. Detailed Analysis: The judgment pertains to a case where the Income-tax Appellate Tribunal referred a question of law to the High Court regarding the exclusion of development rebate and relief under section 35B for the purpose of relief under section 80-I of the Income-tax Act, 1961. The assessee, engaged in manufacturing hand tools, declared a net profit for the assessment year and claimed relief under section 80-I. The Income-tax Officer made adjustments to the figure for deduction under section 80-I. The Appellate Assistant Commissioner did not address the contention related to relief under section 80-I, leading to the matter being sent back to him for a decision. The Appellate Assistant Commissioner concluded that relief under section 80-I should be calculated on the assessed income, not on book profits, and the matter was further appealed to the Tribunal. The Tribunal had to determine if relief under section 80-I should be granted on the assessed income or on the income enhanced by development rebate and weighted expenditure. The Tribunal upheld the Appellate Assistant Commissioner's decision, leading to the reference of the question to the High Court. The High Court considered the arguments presented by the assessee's counsel, contending that relief should have been granted on a higher income figure that included the development rebate and weighted expenditure. The court delved into the provisions of section 80-1 of the Income-tax Act, emphasizing that relief should be allowed on profits and gains assessable under the Act. The counsel relied on a decision by the Calcutta High Court supporting the assessee's position. However, the High Court noted that a Supreme Court decision had overruled the case on which the Calcutta High Court relied, emphasizing the interpretation of relevant provisions. The High Court referenced a Supreme Court decision related to a similar provision, highlighting that unabsorbed depreciation and development rebate should be deducted while computing profits for the purpose of the relevant section. The court emphasized that the rebate should be allowed on assessable profits and gains after deducting development rebate and weighted expenditure. Citing a decision by the Madras High Court, the High Court reiterated the principle that certain deductions must be made while computing total income for the purpose of calculating special deductions under section 80-I. Ultimately, the High Court answered the referred question in favor of the Revenue, emphasizing the need to deduct certain elements while calculating relief under section 80-I. The respondents were also granted costs in the matter.
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