Commissioner of Income Tax vs M.P. State Electricity Board

J.S. Verma, Actg. C.J.

This is a reference u/s 256(1) of the Income Tax Act, 1961, at the instance of the Revenue for decision of the following question of law :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in its conclusion that the Madhya Pradesh State Electricity Board, the assessee herein, is a company, being a licensee within the meaning of the Electricity (Supply) Act, 1948, specified in the proviso to Section 34(3)(a) of the Income Tax Act, 1961, and that the assessee is exempt from providing and maintaining a development rebate reserve as required u/s 34(3)(a) of the Income Tax Act, 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in allowing the claim of the assessee-Electricity Board to the allowance of development rebate as admissible u/s 33(1)(b)(B)(iv) read with Section 34(3)(a) of the Income Tax Act 1961, in the computation of its loss for the assessment year 1974-75 ?"

The material facts are these : The relevant assessment is 1974-75. In the original return filed on September 28, 1974, by the assessee, it showed a total loss of Rs. 44,02,028 but the same was subsequently revised on March 3, 1975, showing the loss at Rs. 3,61,03,429. The return was again revised on March 10, 1975, claiming that the loss was Rs. 3,68,12,429. A revised computation was again filed on March 15, 1977, showing the loss at Rs. 35,21,02,268. During the assessment proceedings, the assessee claimed development rebate at Rs. 4,28,58,585. The Income Tax Officer rejected this plea of the assessee and disallowed the claim since it did not create any development rebate reserve as required by Section 34(3) of the Act.

The Commissioner of Income Tax (Appeals) allowed the assessee''s claim in its appeal. The Tribunal also upheld that view. Aggrieved by this conclusion, the Revenue sought a reference which has been made to answer the above questions of law.

There is no dispute that the point for our decision is covered by an earlier decision between the same parties in M.C.C. No. 364 of 1975 dated October 19, 1981 ( Commissioner of Income Tax Vs. M.P. State Electricity Board, , wherein it was held that the assessee was covered by the first proviso to Section 34(3)(a) of the Act and, therefore, exempt from providing and maintaining a development rebate reserve. On this view, the other question does not arise for decision. We have, therefore, to answer this reference following the earlier decision.

Consequently, the reference is answered in the assessee''s favour and against the Revenue as under :

"The Tribunal was justified in holding that the assessee was covered by the first proviso to Section 34(3)(a) of the Act and, therefore, exempt from providing and maintaining development rebate reserve."

The assessee will get costs from the Revenue. Counsel''s fee Rs. 200, if certified.