1990 (10) TMI 3

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....ncome-tax Act, 1922, and was, therefore, entitled to allowance of development rebate on the plant and machinery installed after January 1, 1958. " It would be unnecessary to detail the facts which led to the framing of the question and the answer given. The dispute centered around the timing of the creation of the reserve known as the development rebate reserve. In CIT v. Veeraswami Nainar [1965] 55 ITR 35, the Madras High Court took the view that development rebate reserve should be made at the time of making up the profit and loss account. This view was affirmed by this court in Indian Overseas Bank Ltd. v. CIT [1970] 77 ITR 512. Both cases arose under the Indian Income-tax Act, 1922. A distinction was drawn between development rebate ....

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....nt is framed. This led to a spate of litigation. Pressing Indian Overseas Bank's case[1970] 77 ITR 512 (SC), some taxing authorities in some cases took revisional and rectificatory actions. These reached various High Courts. The Gujarat High Court in Surat Textile Mills Ltd. v. CIT [1971] 80 ITR 1 opted for what may be called a narrow view in assuming that besides Explanation (a) reproduced above Explanations (b) and (c) as well stood wiped out by Indian Overseas Bank's case [1970] 77 ITR 512 (SC). In these circumstances, the Central Board of Direct Taxes took the step of withdrawing in the year 1972 the Circular dated October 14, 1965, to the extent it stood superseded by the decision in Indian Overseas Bank's case [1970] 77 ITR 512(SC)....