1980 (1) TMI 49

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.... development rebate granted to the assessee ? " The assessee, Malayalam Plantations Ltd., Cochin, is a limited company, owning a number of estates in Kerala. The company is registered in London and the shareholders and the board of directors are in London. That is why it is known as the sterling company. As it was receiving income from plantations and from other activities in India, it is assessable in India as well, in respect of such profits. The assessment years relevant for the purposes of these references are 1965-66 and 1966-67. The company had installed machineries in the course of the accounting years relevant to the assessment years 1958-59 to 1966-67. On these materials, it claimed development rebate. The eligibility of the cla....

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....he amount of the profit of such previous year (as arrived at without making the debit aforesaid) in accordance with the profit and loss account ......... .. The section insists on the assessee creating a development rebate reserve equal to 75 per cent. of the development rebate to be actually allowed, by debiting to the profit and loss account of the relevant accounting year and crediting to a reserve account, to be utilised by the assessee during a period of eight years next following, for the purpose of the business other than for distribution of dividends or for remittance outside India. It is enough to notice at this stage that utilisation of the reserve for the prohibited purposes of distribution of dividends or remittance outside I....

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....ound pound pound pound 1959-60 11,850 13,304 9,978 3,991 1960-61 13,500 18,194 13,645 5,458 1961-62 5,500 7,697 5,773 2,309 1962-63 6,500 8,459 6,344 2,538 1963-64 5,800 7,440 5,580 2,232 1964-65 8,750 11,623 8,717 3,487 1965-66 18,200 24,245 18,184 7,274 1966-67 17,000 22,460 16,845 6,738 ------------------------------------------------------------------------------------------------------------------- 87,100 1,13,422 85,066 34,027 " --------------------------------------------------------------------------------------------------------------------------------------------------- From the table it will be seen that the total reserves actually created in the books from the assessment year 1959-60 to the as....

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.... it had not been established that the development rebate had been utilised for distribution of dividends which was prohibited under s. 34(3) of the Act. He also found that the assessee had created development rebate for all the years from 1959-60 to 1966-67, very much in excess of what is actually required. It was his finding that the development rebate reserve was more than what was required by the terms of the section. The department appealed to the Tribunal. Agreeing with the AAC, the Tribunal found that the reserve required for all these years was only pounds 45,222, whereas there was in existence a reserve even after appropriation, of pounds 55,064. The contention of the department that the excess of the earlier year was not availab....