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Issues involved:
The judgment deals with the following Issues: 1. Whether the deduction under section 80J of the Income-tax Act, 1961 was rightly allowed by the Appellate Tribunal. 2. Whether the sum of Rs. 41,174, being the development rebate deducted by the Income-tax Officer, could be deducted again from the claimed deduction under section 80J(1) of the Act. Issue 1: The case involved the deduction under section 80J of the Income-tax Act, 1961. The assessee, owning flour mills and a cold storage unit, claimed deductions for losses, depreciation, and development rebate for different assessment years. The Tribunal allowed the deduction under section 80J(1) first, before considering any deficiencies from earlier years. The High Court upheld this decision, stating that the losses and rebates from earlier years need not be adjusted again against the profits of the cold storage business for a specific assessment year. Issue 2: Regarding the second issue, the Tribunal considered whether the development rebate of Rs. 41,174, already deducted while determining the gross total income, could be further reduced from the claimed deduction under section 80J(1) of the Act. The High Court ruled in favor of the assessee, stating that once the development rebate was deducted in arriving at the gross total income, it should not be reduced again from the claimed deduction under section 80J(1). The Court emphasized that the development rebate is a special allowance to encourage new industrial undertakings and should not be double-counted in deductions. In conclusion, the High Court upheld the Tribunal's decisions on both issues, ruling in favor of the assessee and against the revenue.
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