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TMI Blog1990 (11) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family. The assessment year concerned is 1967-68. For this assessment year, the assessee claimed development rebate of Rs. 42,178. He created a development rebate reserve as required by section 33 read with section 34(3)(a) of the Act. The development rebate was, accordingly, allowed. However, in the course of the assessment proceedings for the assessment year 1972-73, the Income-tax Officer found that the development rebate reserve of Rs. 42,178 created during the previous year relevant to the assessment year 1967-68 has been transferred to the capital account within a period of eight years from the creation of such reserve. The Income-tax Officer was of the opinion that such transfer amounts to violation of the condition prescribed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India as profits or for the creation of any asset outside India : Provided that this clause shall not apply where the assessee is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948 (54 of 1948), or where the ship has been acquired or the machinery or plant has been installed before the first day of January, 1958 : Provided further that where a ship has been acquired after the 28th day of February, 1966, this clause shall have effect in respect of such ship as if for the words 'seventy-five', the word fifty had been substituted." The words within brackets were substituted for the words "the relevant previous year" by the Finance Act, 1990, with retrospective effect from April 1, 1962. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any asset outside India. The simple question here is whether the transfer of development rebate reserve to the capital account within a period of eight years of the creation of the reserve violates any of the conditions prescribed by the clause. It may be noted that the said amount can be utilised for the purpose of the business of the undertaking but not for the two specified purposes. In this case, the transfer to the capital account is for the purpose of the business of the undertaking but it does not fall within any of the two prescribed prohibited situations. If so, there is no violation and the assessment for the assessment year 1967-68 could not have been rectified by the Income-tax Officer under section 154. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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