1983 (9) TMI 109 - AT - Income Tax

Summary

Issues:
1. Set off of unabsorbed depreciation and unabsorbed development rebate against income for specific assessment years.
2. Interpretation of provisions under section 32(2) and section 33(2) of the Income-tax Act, 1961.
3. Consideration of belatedly filed returns for assessment years 1975-76 and 1976-77.
4. Determination of eligibility for carry forward and set off of unabsorbed depreciation and unabsorbed development rebate.

Analysis:

The judgment by the Appellate Tribunal ITAT Bangalore involved two appeals by the assessee and two appeals by the revenue, all concerning the set off of unabsorbed depreciation and unabsorbed development rebate against income for specific assessment years. The issue arose from the belated filing of returns for the assessment years 1975-76 and 1976-77, leading to a dispute regarding the eligibility of the assessee to carry forward and set off these amounts against income for subsequent assessment years.

The assessee contended that the unabsorbed depreciation and unabsorbed development rebate should be set off against the income for the assessment years 1977-78 and 1978-79. However, the Income Tax Officer (ITO) held that the belatedly filed returns for 1975-76 and 1976-77 were non est in the eye of the law, thereby disallowing the claim. The Appellate Authority Commissioner (AAC) upheld the disallowance of unabsorbed depreciation but directed the ITO to allow the set off of unabsorbed development rebate, leading to appeals from both parties.

The Tribunal analyzed the provisions under section 32(2) and section 33(2) of the Income-tax Act, emphasizing that an assessment must be made on the assessee for the allowance of unabsorbed depreciation and unabsorbed development rebate. Since no assessment was made for the relevant years, the Tribunal rejected the assessee's claim for the set off of unabsorbed depreciation in the subsequent years.

Regarding the unabsorbed development rebate, the Tribunal considered the provisions of section 33(2) and previous judicial decisions. It noted that the absence of a specific reserve in the assessment years 1975-76 and 1976-77 did not preclude the carry forward and set off of the development rebate. Citing relevant case law, the Tribunal affirmed that the deduction is permissible even if the formal claim was not made in the initial assessment year.

Ultimately, the Tribunal dismissed both the assessee's and the departmental appeals, affirming the AAC's decision to allow the set off of unabsorbed development rebate for the assessment years in question. The judgment clarified the interpretation of relevant provisions and established the eligibility criteria for carrying forward and setting off unabsorbed depreciation and unabsorbed development rebate in income tax assessments.