Development rebate reserve under the Income-tax Act was held satisfied, with no time limit for claiming development rebate.

Section 34(3)(a) of the Income-tax Act, 1961 was examined on whether the development rebate reserve had been created in compliance with the statutory requirement. The High Court followed its earlier view and the majority approach of other High Courts that the Act does not impose any limitation of time for claiming development rebate, and that the reserve requirement could be treated as satisfied on that basis. The question was answered in the affirmative, and the Appellate Tribunal was held to be right in law.

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Issues: Whether the requirement of section 34(3)(a) of the Income-tax Act, 1961 regarding creation of development rebate reserve was satisfied.

Analysis: The view consistently taken by several High Courts was that the Income-tax Act does not contemplate any limitation of time for claiming development rebate. The Court followed the earlier view of this High Court, which reflected the majority approach among the High Courts, and held that the statutory requirement concerning creation of the reserve stood satisfied.

Conclusion: The question was answered in the affirmative, holding that the Appellate Tribunal was right in law.

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