Sabyasachi Mukharji, J. - (1.) This reference under Section 256(1) of the I.T. Act, 1961, relates to the assessment year 1971-72. It appears that the ITO did not allow relief under Section 80-I of the I.T. Act, 1961, as the assessee had not claimed the same in the return as required under the I.T. Rules. In this connection it may not be inappropriate to refer to the relevant portion of the order of the ITO which reads as follows: "(5) Development rebate for earlier year as detailed below: Up to 68-69 A. Y. Rs. 23,79,623 69-70 " Rs.6,94,995 70-71 " Rs. 15,82,829 Rs. 46,57,447 "
(2.) Thereafter, the ITO has observed as follows : "Under Section 80-I on Rs. 4,60,42,731 @ 8%, i.e., after adjustment of income under Section 41(2), rent, sundry receipt, technical know-how and rebate allowed under Section 80G. Rs. 36,83,418 Rs. 2,47,82.407 Total income: Rs. 2,31,02,004 Round off to : Rs. 2,31,02,000"
(3.) There was an appeal before the AAC. The AAC, relying upon the decision in the case of Indian Transformers Ltd. and Gurjargravures Pvt. Ltd. [1972] 84 ITR 723 (Guj), directed the ITO to allow relief to the assessee under Section 80-I on the gross total income before setting off of the carried forward losses and development rebate. Being aggrieved by the order on this aspect, the Revenue went up in appeal before the Tribunal. The Tribunal had observed that similar issue arose in the assessment year 1970-71, in which it had held that the assessee was entitled to the relief under Section 80E on the profits of priority industry before setting off of the unabsorbed development rebate. In this connection, it should be proper to refer to the order of the Appellate Tribunal which, inter alia, observed as follows: "In ground No. 6 the Department has objected to the allowance of relief under Section 80-I on the gross total income before setting off of the unabsorbed development rebate. Similar issue arose in the assessment year 1970-71. In that year, we have held that the assessee is entitled to the relief under Section 80-I on profits of the priority industry before setting off of the unabsorbed development rebate. The parties have raised the same contentions in this year. We follow our decision for the assessment year 1970-71 on this point. We may point out that in this year the gross total income is such that relief under Section 80-I can be allowed to the full extent and Section 80A(2) does not come in the way. We, therefore, affirm the order of the AAC.";