COMMISSIONER OF INCOME TAX Vs. MALAYALAM PLANTATIONS LIMITED

JUDGEMENT

(1.) AT the instance of the revenue, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following question of law for our determination :

(2.) THE assessee, Malayalam Plantations Ltd., Cochin, is a limited company, owning a number of estates in Kerala. THE company is registered in London and the shareholders and the board of directors are in London. That is why it is known as the sterling company. As it was receiving income from plantations and from other activities in India, it is assessable in India as well, in respect of such profits. THE assessment years relevant for the purposes of these references are 1965-66 and 1966-67. THE company had installed machineries in the course of the accounting years relevant to the assessment years 1958-59 to 1966-67. On these materials, it claimed development rebate. THE eligibility of the claim is governed by Section 34(3) of the I.T. Act, which reads thus :

(3.) FROM the table it will be seen that the total reserves actually created in the books from the assessment year 1959-60 to the assessment year 1966-67 is 87,100. The total reserves from 1958-59 to 1966-67 was 87,750. For the assessment year 1965-66, the ITO had allowed the development rebate of 24,245 (before applying Rule 8). The assessee should create 75% of the development rebate, that is, only 18,184. It only created a development reserve of 18,200. The balance-sheet for the year had added this amount to the development rebate reserve already shown for the earlier year.