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TMI Blog1979 (1) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... year was only to the extent of Rs. 63,516 because there was an excess provision for the previous year to the extent of Rs. 33,206. Before the ITO, the contention of the assessee was that the excess provision for the earlier year should be taken into account while considering the development reserve created for the assessment year 1962-63. The ITO, however, proceeded to determine the development rebate on the footing that a reserve in the sum of Rs. 63,516 only was created. He, therefore, allowed a proportionate amount of development rebate to the extent of Rs. 84,689. The appeal filed by the assessee was rejected by the AAC who held that the claim for development rebate was allowable only on the basis of the actual reserve created during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(3)(a), before an assessee can claim the full amount as development rebate, it must be shown that an amount of 75% of such development rebate is debited to the profit and loss account of the relevant previous year. The only question which, therefore, arises for the purposes of the decision of the question referred to us is whether the assessee had debited the required 75% of the development rebate to the profit and loss account in respect of the assessment year 1962-63. The copy of the profit and loss account for the assessment year 1962-63, which is annex. " B " to the statement of the case, contains an entry as follows : " Development Rebate Reserve Rs. Provision 1961 96,722 Less: Excess provision pr. year 33,206 --------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e development rebate reserve, the amount appropriated was less than 75% of the development rebate claimed. There was nothing to prevent the assessee-company from taking into account the excess provision of the previous year. It is obvious that a corresponding reversal entry has been made and at the time when the profit and loss account is made, this entry has been given effect to by bringing over the excess provision for the earlier year to be made a part of the development reserve for the assessment year in question. In our view, therefore, the Tribunal was justified in holding that the excess amount in respect of the development rebate reserve for the year 1960 could be taken into account in the assessment year in question and the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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