Carry-forward development rebate remains available despite nationalisation of the coal mine and may be set off later.

Unabsorbed development rebate under the Income-tax Act could be carried forward and set off against later-year income even after nationalisation of the coal mining business. The rebate is allowed against total income and, if not fully absorbed, continues to succeeding assessment years under section 33(2)(ii); its availability is not limited to the continued existence of the same business in which it first arose. Nationalisation of the colliery did not extinguish the assessee's existence, and section 7(1) of the Coal Mines (Nationalisation) Act, 1973 preserved liability for pre-nationalisation obligations. The carried-forward rebate was therefore available for set-off.

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Issues: Whether the assessee could carry forward and set off the unabsorbed development rebate of an earlier assessment year against the income of the year under appeal despite nationalisation of the coal mining business.

Analysis: The development rebate under the Income-tax Act is allowable against the assessee's total income and, where not fully absorbed, is carried forward to succeeding assessment years under section 33(2)(ii). Its availability is not confined to the continuance of the very same business in which it originally arose. The nationalisation of the coal mine did not extinguish the assessee's existence, and section 7(1) of the Coal Mines (Nationalisation) Act, 1973 preserved the assessee's liability for pre-nationalisation obligations. The statutory scheme did not justify withholding the carried-forward rebate merely because the colliery business had been taken over by the Government.

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

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