COMMISSIONER OF INCOME TAX Vs. ARJUN PRASAD

JUDGEMENT

(1.) The Tribunal has referred the following two questions of law for the opinion of this Court :

(2.) Relevant facts giving rise to the above questions of law are being stayed herein after. The present reference to the assessment year 1974-75. During this assessment year the assessee had claimed a deduction of Rs. 13,752/- as unabsorbed development rebate, which he had carried forward from the earlier assessment year 1973-74. The Income-tax officer rejected the claim pertaining to the said deduction on the ground that, in law, the assessee did not furnish any return of his income for the assessment year 1973-74 since the same was filed beyond the period prescribed under Section 139(4) of the Income Tax Act, 1961 (hereinafter to be referred as 'the Act'). According to the Income-tax officer since the return was invalid, therefore, no assessment of profit or loss of the assessee could be made for assessment year 1973-74 and, therefore, there was no quantification of the development rebate admissible during this period. Therefore, according to him there was no occasion for carrying forward the unabsorbed development rebate as an admissible deduction from the income of the assessment year 1974-75. The assessee preferred an appeal to the Appellate Assistant Commissioner and on having failed to get any relief on this count, he preferred further appeal to the Tribunal. The Tribunal held that the assessee is entitled to the deduction as claimed by him.

(3.) On facts the Tribunal has held that from the Trading as well as the profit and Loss Account filed by the assessee during the assessment year 1973-74, it transpired that the assessee had created development rebate reserve in the profit and Loss Account to the extent of Rs. 15,123/- and in that year there was not loss of Rs. 34,751/85. During the assessment year 1974-75, as per the profit and Loss Account there was a profit of Rs. 20,006/- and the Income Tax Officer had assessed the income at Rs. 26,517. Therefore, during this period there was sufficient income to absorb the development rebate carried forward from the earlier assessment year 1973-74.