- (1.) THE matter here concerns the carrying forward of development rebate.
(2.) THE assessee here is a company manufacturing steel ingots. During the assessment year 1973-74, it suffered losses. Development rebate at the rate of 25 per cent. was claimed in respect of machinery worth Rs. 29,52,262. This claim was declined by the Income-tax Officer on the ground that no development rebate reserve has been created by the asses-see. On appeal, however, the Commissioner of Income-tax held that the assessee was entitled to development rebate and also directed the Income-tax Officer to compute it and carry it forward. This was later upheld by the Tribunal. This is what led to the following question being referred to this court for its opinion : "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing that the development rebate should be determined and carried forward for being set off in the assessment year in which the assessee makes a profit and creates the requisite reserve ?"
(3.) THE question posed has clearly to be answered in the affirmative, in favour of the assessee and against the Revenue, keeping in view the judgment of this court in Acropolymers (P.) Ltd. v. CIT [1985] 151 ITR 158, where it was held that where the total income had been computed before allowing development rebate and there is a loss, there is no legal obligation to create any statutory reserve in that year as no development rebate is actually to be allowed in that year and that the assessee could not, on that account, be denied the benefit of development rebate in the subsequent assessment years when profit is made and such a reserve is created The reference is answered accordingly. There will, however, be no order as to costs.;