TMI Blog1978 (2) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, the assessee was entitled to claim relief under section 80J of the Income-tax Act before the appellate authority when no such claim was made before the Income-tax Officer ? " The relevant facts may be briefly stated: The assessee is a registered firm with the financial year as the accounting year and the main business has been that of manufacture of insecticides. During the year of account, the total turnover Was found to be Rs. 6,42,090 with a gross profit of 30 per cent. The ITO noticed certain defects in the books and hence added an ad hoc amount of Rs. 50,000 to the trading account. The addition was subsequently reduced to Rs. 20,000 by the AAC. However, the above addition is not the subject-matter of the present case. Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was unable to create the required reserve in full during the assessment year 1970-71 and the required reserve had to be created only in the year 1971-72 when the appropriate profits were available. The Tribunal further held that the assessee is bound to create the reserve as required under s. 34 of the I.T. Act in the year in which the machinery has been installed or in the alternative in the year in which profits were available for creating the required reserve. Since the machinery was installed during the assessment year 1970-71 and the assessable profits for this year were Rs. 3,639 the assessee was bound to create the reserve at least to the extent of the above sum of Rs. 3,639 during the assessment year 1970-71 and the assessee not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue has, therefore, made an application for reference of the two questions extracted above for our opinion. So far as the first question is concerned, it is contended by Mr. Rama Rao, the learned counsel for the revenue, that since the development reserve has not been created in the year 1970-71 as required by the mandatory provisions of s. 34, development rebate ought not to have been allowed for the next year 1971-72. He relied upon a decision of the Supreme Court in Indian Overseas Bank Ltd. v. CIT [1970] 77 ITR 512 in support of this proposition. This judgment of the Supreme Court was noticed by the Bombay High Court in Indian Oil Corporation Ltd. v. S. Rajagopalan, ITO [1973] 92 ITR 241 and it was held by the Bombay High Court tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , This is a pure question of fact which has to be determined on the facts of the present case. In the order of the AAC, it was observed that the ITO had not given any reason as to why he had not allowed the exemption under s. 80J of the Act. This observation of the AAC presupposes that a claim was preferred by the assessee before the ITO. The Tribunal also in a way finds that this claim has been made before the ITO. No doubt, the Tribunal has also given a finding that the assessee is entitled to claim this relief before the AAC even though he has not raised it before the ITO. This finding we are unable to agree with having regard to the decision of the Supreme Court in Addl. CIT v. Gurjargravures P. Ltd. [1978] 111 ITR 1. However, in view o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
