1983 (10) TMI 6 - HC - Income Tax

Summary

Issues Involved: Determination of entitlement to development rebate and deduction under section 80-I for the assessment years 1970-71 and 1971-72.

Development Rebate Entitlement:
The assessee, a private limited company engaged in manufacturing bolts, nuts, and screws, claimed development rebate at 35% on the value of machinery installed during the relevant years. The Income-tax Officer allowed rebate at 20% due to machinery usage for other machinery production. The Appellate Assistant Commissioner accepted the claim, which was upheld by the Tribunal based on a previous decision. The High Court, following precedent, ruled in favor of the assessee regarding development rebate entitlement.

Deduction under Section 80-I:
The assessee also sought deduction under section 80-I for the assessment year 1970-71, but the Income-tax Officer rejected it due to inability to separate income sources and "nil" total income. The Tribunal disagreed, stating that relief under section 80-I should be independent of positive income. The High Court referred to a similar case and held that if total income is "nil," no deduction can be granted under Chapter VI-A, in line with section 80A(2) limitations. The court ruled against the assessee on the deduction issue.

Separate Judgement:
The High Court granted leave to the Revenue for appealing the decision on the development rebate entitlement issue, as leave had already been granted by the Supreme Court.