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TMI Blog1985 (5) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asst. yr. 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 under took 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 Limited was only of academic interest. 3. The assessee appealed to the CIT (A) and contended that the ITO's statement that consequent upon the nationalisation of coal industry, all the liabilities of the assessee-company vested in the government was not correct. Reference was made to s. 7(1) of the Coal Mines (Nationalisation) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced 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 no where been stated in the Act that eligibility for unabsorbed development rebate would depend on the continuance of the same business which the claim for development rebates 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 s. 72(1) relating to carry forward and set off of business losses. Even s. 34 which enumerates the condition for inter alia grant of development rebate only contemplates withdrawal of the development rebate allowed earlier on infraction of the conditions contained in s. 34 (3) (a) but this goes no further and does not say a word about unabsorbed development rebate being withheld in any situation or contingency. There is yet another way of looking at the matter. Under s. 33(2), the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of s. 34(3) (a) of the Act and urged that deduction referred to in s. 33 shall not be allowed unless an amount equal to 75per cent of the development rebate to be actually allowed is debited to the P L A/c 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 ld. counsel for the assessee, on the other hand, reiterated the same contentions as were advanced before the CIT (A). He invited our attention to the relevant provisions of the Coal Mines (Nationalisation) Act, 1972 to show that 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 s. 33(2) of the Act. He also urged that there is no provision in the Act which states that the business in which the claim for development rebate arose in an earlier year should necessarily be in existence in the year in which the unabsorbed development rebate is sought to be adjusted. According to him, once development rebate is held to be admissible sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the development rebate shall be carried forward for more than eight assessment year 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 thereafter a part of the development rebate remains unabsorbed the balance outstanding may be carried forward to the following year and so on for an aggregate period not exceeding eight year. Reference may be made to the decision of the Supreme Court in the case of Rajalayam Mills Ltd. vs. CIT, Madras 1978 CTR (SC) 16 : (1978) 115 ITR 777 (SC) wherein it has been made clear that if any part of the development rebate remains unabsorbed, it is to be set off against the other income of the assessee under any of the chargeable heads and it is only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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