Development rebate reserve exemption under the Income-tax Act upheld for the assessee, following an earlier binding decision.

The first proviso to section 34(3)(a) of the Income-tax Act, 1961 exempted the assessee from creating and maintaining a development rebate reserve for claiming development rebate under section 33(1)(b)(B)(iv). That issue was treated as already concluded by an earlier decision between the same parties, which had held that the assessee fell within the proviso. On that basis, the connected question on allowance of development rebate in computing loss did not survive independently. The reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether the assessee was covered by the first proviso to section 34(3)(a) of the Income-tax Act, 1961 and, therefore, exempt from providing and maintaining a development rebate reserve for claim of development rebate under section 33(1)(b)(B)(iv) read with section 34(3)(a).

Analysis: The question was treated as concluded by the earlier decision between the same parties, which had held that the assessee fell within the first proviso to section 34(3)(a) and was not required to create or maintain the development rebate reserve. On that basis, the connected question relating to allowance of development rebate in computation of loss did not survive independently.

Conclusion: The assessee was covered by the first proviso to section 34(3)(a) and was exempt from providing and maintaining the development rebate reserve; the reference was answered in favour of the assessee and against the Revenue.

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