TaxTMI 
TaxTMI 
Development rebate allowed on assets sold to Government - Whether not liable to be withdrawn even if vendor credits to profit and loss account reserve which he had originally created
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....s account reserve which he had originally created clarification 1 1. In para 1.45 of their 100th Report (1969-70), the Public Accounts Committee have observed as follows : The Government are yet to clarify to the public whether a party would forfeit the development rebate when the entire assets are sold to Government and the development rebate reserve cannot stand as such in his books. The Comm....
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....fer to the capital account of the proprietor. If the sale takes place within 8 years of the previous year when the development rebate was created and the reserve is credited to the proprietors capital account, it would amount to utilisation of the reserve for distribution by way of profit to the proprietor under section 34(3)(a)(i). Circular : No. 40 [F. No. 10/59/69-IT(A-II)], dated 11-5-1970. ....
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....ance outside India as profits, or for creation of any asset outside India; and 2. The machinery or plant in respect of which development rebate has been allowed is not to be sold or otherwise transferred for a period of 8 years. 3. Under proviso to section 34(3)(b), the transfer or sale of the asset will not be penalised in certain circumstances. However, while claiming protection under this pro....