1990 (10) TMI 25 - HC - Income Tax

Summary

Issues:
1. Entitlement of the assessee to claim development rebate for the assessment year 1974-75 without quantification in the assessment year 1973-74.
2. Necessity of quantification of development rebate in the relevant year before claiming it as unabsorbed in any subsequent year.

Analysis:
The case involved the assessee claiming a deduction of unabsorbed development rebate carried forward from the assessment year 1973-74 in the assessment year 1974-75. The Income-tax Officer rejected the claim due to the late filing of the return for 1973-74, leading to no quantification of the development rebate for that year. The Appellate Assistant Commissioner and the Tribunal held in favor of the assessee, stating that there was sufficient income during 1974-75 to absorb the carried forward development rebate.

The Tribunal based its decision on the provisions of section 33 of the Income-tax Act, which allows for the carry forward and deduction of unabsorbed development rebate to subsequent years. The Tribunal found that the assessee had created the necessary development rebate reserve and that the loss in 1973-74 prevented the absorption of the deduction, making it eligible for carry forward to 1974-75. The Tribunal emphasized that the entitlement to deduction is not dependent on quantification by the Income-tax Officer in the previous year but can be ascertained during the assessment for the year in which the deduction is claimed.

The judgment concluded that the assessee was entitled to the deduction for the assessment year 1974-75, rejecting the Income-tax Officer's argument that the late filing of the return in 1973-74 invalidated the claim. The court answered both questions of law in favor of the assessee, affirming the Tribunal's decision. The judgment highlighted that once the statutory conditions for deduction are met, the carry forward of unabsorbed development rebate is not contingent on quantification by tax authorities in the previous year. The court ordered no costs in the case and directed the order to be sent to the Income-tax Appellate Tribunal, Patna Bench for reference.