TMI Blog2002 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... nd against the Revenue. - - - - - Dated:- 24-9-2002 - Judge(s) : R. JAYASIMHA BABU., K. RAVIRAJA PANDIAN. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The question referred to us is: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the development rebate reserve written back should not be reduced from the capital base under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964?" The assessment years are 1983-84 and 1984-85. The assessee which had a development rebate reserve transferred the amount in that reserve to the general reserve as the period for which the reserve was required to be maintained had come to an en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961, which deals with the conditions for depreciation of allowance and development rebate. Sub-section (3)(a) of section 34 provides as under: "(3)(a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five 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 a 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, other than- (i) for distribution by way of dividends or profits; or (ii) for remittance outside India as profits or for the creation of any asset outside India: Provided that this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight years next following for the purposes of the business of the undertaking, other than for distribution by way of dividends or profits or for remittance outside India as profits, or for the creation of any asset outside India. The amount credited to the reserve is strictly not the amount which has been allowed to be deducted by way of development rebate. Section 34(3)(a) makes that clear by referring to "an amount equal to seventy-five per cent. of the development rebate". The computation of the capital base under the Second Schedule to the Act expressly provides for including therein the development rebate reserve, in addition to its other reserves. Having regard to these provisions, it is difficult to accept the submission made f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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