9911796707
TMI Blog1985 (5) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... come for the assessment year 1979-80, now under appeal. Meanwhile, the coal mining business of the assessee-company was nationalised by the Coal Mines (Nationalisation) Act, 1973, and the assessee, thus, stood stripped of the colliery business though it did not become defunct or extinct. In other words, the assessee-company continued to be in existence and had income from some other sources of income. The assessee's claim for adjustment of unabsorbed development rebate for the assessment year 1972-73 with the income for the year under appeal was negatived by the ITO on the ground that on nationalisation of coal industry the business of the assessee in coal mining was taken over by the Government and as such its assets and liabilities vested in the Government for which the assessee was given compensation. According to the ITO, as a result of nationalisation of coal industry, the Government undertook all the responsibility to meet the liabilities of the coal industry and that the fact that the company carried on its name as the Raneegunge Coal Association Ltd. was only of academic interest. 3. The assessee appealed to the Commissioner (Appeals) and contended that the ITO's statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the coal mine(s) owned by it vested in the Government on the appointed date, i.e., 1-5-1973, but the assessee-company as such was continuing to function. The development rebate was introduced for giving incentive to an assessee to develop his business. It is a concession to the assessee and, therefore, unless the law specifically so provided, it would not be proper to deny the benefit to any assessee on the basis of assumptions only or by importing any terms and conditions not envisaged in the Act itself. It has nowhere been stated in the Act that eligibility for unabsorbed development rebate would depend on the continuance of the same business in which the claim for development rebate arose initially. In this connection, it would be relevant to note that where the Legislature intended otherwise it had in its own wisdom specifically provided for that vide the provisions contained in section 72(1) relating to carry forward and set off of business losses. Even section 34, which enumerates the conditions for, inter alia, grant of development rebate only, contemplates withdrawal of the development rebate allowed earlier on infraction of the conditions contained in section 34(3)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was entitled to set off its unabsorbed development rebate which arose in the colliery business. He relied on the decision of the Punjab and Haryana High Court in the case of CIT v. Indian Motors Transport Co. (P.) Ltd. [1974] 95 ITR 73. He also referred to the provisions of section 34(3)(a) and urged that deduction referred to in section 33 shall not be allowed unless an amount equal to 75 per cent of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to the reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking. The learned counsel for the assessee, on the other hand, reiterated the same contentions as were advanced before the Commissioner (Appeals). He invited our attention to the relevant provisions of the Coal Mines (Nationalisation) Act, to show that the Government took over the assets of the company but the liabilities were not taken over. He urged that development rebate is required to be carried forward and adjusted as provided for in section 33(2). He also urged that there is no provision in the Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount as is sufficient to reduce the total income of the assessee assessable for that assessment year, computed in the manner aforesaid, to nil, and the balance of the development rebate, if any, still outstanding shall be carried forward to the following assessment year and so on, so however that no portion of the development rebate shall be carried forward for more than eight assessment years immediately succeeding the assessment year relevant to the previous year in which the ship was acquired or the machinery or plant installed or the immediately succeeding previous year as the case may be." It, therefore, follows that if the total income of the assessee for the year of installation is nil or less than the full amount of the development rebate, the amount of development rebate, to the extent to which it is not absorbed, may be carried forward to the following year and set off against the total income of the assessee for that year and even if thereafter a part of the development rebate remains unabsorbed, the balance outstanding maybe carried forward to the following year and so on for an aggregate period not exceeding eight years. Reference may be made to the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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