COMMISSIONER OF INCOME TAX Vs. TATA ROBINS FRAZER LIMITED

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961. The assessee is a public limited company. In the assessment year 1970-71, the company filed return showing income at nil. The assessee had claimed depreciation of Rs. 11,37,531, but later on, it revised its claim for depreciation and filed another depreciation chart in which the assessee did not claim extra shift allowance on certain machineries. Rs. 1,31,230 was thus excluded from the claim. It thus withdrew its claim on account of extra shift allowance. The Income-tax Officer allowed the claim of depreciation as originally claimed. The income for the year was returned at Rs. 7,19,590. After setting off past losses and unabsorbed depreciation of the earlier years, the Income-tax Officer determined the income at nil. The assessee had not created any reserve for claiming development rebate. The Income-tax Officer, therefore, held that the claim of development rebate at Rs. 1,51,171 could not be allowed because no reserve as required by law had been created by the assessee.

(2.) IN regard to extra shift allowance, the Appellate Assistant Commissioner in appeal, held that extra shift allowance of Rs. 1,31,230 should not be allowed in the relevant assessment year. IN regard to development rebate, he directed that the development rebate should be quantified and it should be carried forward as a claim to the next year.

(3.) IT is not in controversy that no reserve had been created during the relevant accounting year. IT is also not in controversy that the assessee was assessed at nil income. The assessee also does not contend that it was entitled to be allowed development rebate in the said assessment year. Mr. Vyas for the assessee only contended that it had to be quantified and carried over for eight future years. The real controversy between the parties is whether there could be a quantification of the development rebate and whether it could be carried forward. Learned senior standing counsel, Income-tax Department, contended that no quantification in respect of the development rebate could be done nor could any sum be carried forward.