1986 (6) TMI 30

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....did not amount to distribution of profits within the meaning of section 34(3)(a)(i) and section 155(5)(ii)(a) ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the Income-tax Officer is not justified in withdrawing the development rebate ? " The assessee is a company and the assessment years concerned are 1972-73, 1973-74 and 1974-75. In the assessments for these years, the Income-tax Officer allowed development rebate. Later on, however, lie noticed from the balance-sheet of the company that the company had transferred amounts from the development rebate reserve to the share capitalisation account by issue of bonus shares. He formed an opinion that iss....

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....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. Section 155(5)(ii)(a) in so far as it is relevant provides: " (5) Where an allowance by way of development rebate has been made wholly or partly to an assessee in respect of a ship, machinery or plant installed after the 31st day of December, 1957, in any assessment year under section 33 or under the correspon....