1981 (10) TMI 2

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...., 1948 ", specified in the proviso to section 34(3)(a) of the Income-tax Act, 1961, and that the assessee is exempt from providing and maintaining a development rebate reserve as required under section 34(3)(a) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the claim of the assessee Electricity Board to the allowance of development rebate amounting to Rs. 7,60,11,975 as admissible under section 33(1)(b)(B)(iv) read with section 34(3)(a) of the Income-tax Act, 1961, in the computation of its loss for the assessment year 1970-71 ? " The relevant assessment year is 1970-71. The assessee, the M.P. Electricity Board, is constituted under the Elec....

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....re here concerned with section 34(3)(a) and the first proviso to it which read as follows: " 34. (3)(a) The deduction referred to in section 33 shall not be allowed unless an amount equal to seventy-five per cent. of the development rebate to be actually allowed is debited to the profit and loss account of the relevant previous year and credited to a reserve account to be utilised by the assessee during a period of eight years next following for the purposes of the business of the undertaking, other than (i) for distribution by way of dividends or profits ; or  (ii) for remittance outside India as profits or for the creation of any asset outside India : Provided that this clause shall not apply where the assessee is a company, being....

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.... that it is " a company being a licensee within the meaning of the Electricity (Supply Act) " and, therefore, it falls within the proviso and is exempt from the condition of creating a development rebate reserve. There can be no doubt that the assessee is a company for the purposes of the proviso, for section 80 of the Electricity (Supply) Act in clear terms declares that the Board shall be deemed to be a company for purposes of the Income-tax Act. The question then is whether the Board is Cc a licensee within the meaning of the Electricity (Supply) Act " The Board is certainly not a licensee within the definition as contained in section 2(6) of the Electricity (Supply) Act but the words in the proviso to section 34(3)(a) of the Income-tax ....

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....earned counsel for the assessee also argued that the Tribunal was right in its view that when an assessee suffers loss, the condition of creation of a development rebate reserve under section 34(3)(a) of the Income-tax Act does not apply. Learned counsel referred us to the following cases : Radhika Mills Ltd. v. CIT [1969] 74 ITR 661 (Mad), West Laikdihi Coal Co. Ltd. v. CIT [1973] 87 ITR 501 (Cal), Indian Oil Corporation Ltd. v. S. Rajagopalan, ITO [1973] 92 ITR 241 (Bom), CIT v. Orissa Flour Mills (P.) Ltd. [1976] 104 ITR 682 (Orissa) and Addl. CIT v. Vishnu Industrial Enterprises (P.) Ltd. [1980] 122 ITR 919 (All), in support of the view taken by the Tribunal. Learned counsel also very fairly brought to our notice the decision of the Guj....