Commissioner of Income Tax vs Khandelwal Ferro Alloys Ltd.

Bharucha, J.—The two questions that are referred at the instance of the Revenue read thus :-

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the decision of the Appellate Assistant Commissioner that it is not incumbent on the assessee to create the entire development rebate reserve in the previous year in which the machinery is installed in view of insufficient profits and in consequently holding that the assessee-company is entitled to the deduction of development rebate allowance on the basis of the development rebate reserve created for the assessment year 1968-69 to 1970-71 ?

(2) Whether the Tribunal was right in upholding the decision of the Appellate Assistant Commissioner allowing the assessee-company''s claim of development rebate of Rs. 39,06,037 in respect of plant costing Rs. 1,94,04,733 installed during the previous year ended December 31, 1966 notwithstanding the fact that the assessee had not created the statutory development rebate reserve during the year of installation as required by section 34(3)(a) of the Income Tax Act ?"

Counsel are agreed that both questions must be answered in the affirmative and in favour of the assessee, in view of the judgment of this court in Indian Oil Corporation Ltd. Vs. S. Rajagopalan, Income Tax Officer, Companies Circle II(1), Bombay and Others, .

Accordingly, the questions are so answered. No order as to costs.