Carried-forward development rebate remains set off against total income despite nationalisation when statute imposes no same-business

Unabsorbed development rebate carried forward under section 33(2) was held deductible against the assessee's total income in a later year, even after nationalisation of the coal mining business. The availability of the rebate was not confined to profits of the original business or made dependent on continuation of the same business, unless the Act expressly imposed that condition. Section 7(1) of the Coal Mines (Nationalisation) Act, 1973 was noted as preserving liabilities relating to the pre-nationalisation period, and the assessee's continuing existence with other income supported set-off. The restriction in section 34 did not justify denial of the carried-forward rebate.

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Issues: Whether the assessee was entitled to carry forward and set off unabsorbed development rebate under section 33(2) of the Income-tax Act, 1961 against income of a later year after the coal mining business had been nationalised.

Analysis: The unabsorbed development rebate is statutorily carried forward to subsequent assessment years and is to be set off against the total income of the assessee, not merely against the profits of the business in which it originally arose. The existence of the same business in the later year is not a condition for such set-off unless the Act so provides. Section 7(1) of the Coal Mines (Nationalisation) Act, 1973 also indicated that liabilities relating to the pre-nationalisation period continued to attach to the owner, and the assessee remained in existence and had other income. The restriction in section 34 did not justify denial of the carried-forward rebate on the facts.

Conclusion: The assessee was entitled to set off the unabsorbed development rebate of the earlier year against the income of the year under appeal.

Ratio Decidendi: Unabsorbed development rebate, once validly earned, is carried forward and allowable against the assessee's total income in subsequent years, and its availability is not dependent on the continuance of the same business unless the statute expressly so requires.

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