| Case ID |
0afdbbec-eb12-4366-b10d-e00dfebff106 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 1989 |
| Hearing Date |
Jan 01, 1989 |
| Decision |
The Supreme Court held that the Explanation added to section 34(3)(a) by the Finance Act, 1966, was applicable and mandated the creation of a reserve fund in the relevant previous year regardless of the profit or loss account. The court emphasized that mere book entries would suffice for creating such a reserve fund, and if the condition was not fulfilled, the assessee could not claim a deduction for the development rebate. The High Court's decision was upheld, confirming that the assessee was not entitled to the development rebate due to the failure to create a reserve fund. |
| Summary |
In the case of Shubhlaxmi Mills Ltd. v. Additional Commissioner of Income Tax, the Supreme Court of India examined the requirements for claiming development rebate under the Income-tax Act, 1961. The critical question was whether the assessee was obligated to create a reserve fund in the previous year when the machinery was installed, irrespective of the profit and loss outcome. The court clarified that according to the amended provisions, it is essential to create a reserve fund in the relevant previous year for claiming the rebate. The ruling reinforced the necessity of compliance with statutory requirements for tax benefits, highlighting the importance of proper accounting practices and the implications of the Finance Act, 1966. This decision serves as a precedent for future cases involving development rebates, emphasizing the strict adherence to legal requirements in tax law. Keywords include 'development rebate', 'Income-tax Act', 'reserve fund', and 'Supreme Court decisions'. |
| Court |
Supreme Court of India
|
| Entities Involved |
Additional Commissioner of Income Tax,
Shubhlaxmi Mills Ltd.
|
| Judges |
R.S. PATHAK, C.J.,
RANGANATH MISRA, J.
|
| Lawyers |
Not available
|
| Petitioners |
Shubhlaxmi Mills Ltd.
|
| Respondents |
Additional Commissioner of Income Tax
|
| Citations |
1989 SLD 2397,
(1989) 177 ITR 193
|
| Other Citations |
Addl. CIT v. Vishnu Industrial Overseas Bank Ltd. [1980] 122 ITR 919 (All.),
CIT v. U.P. Hotel & Restaurants Ltd. [1984] 145 ITR 598 (All.),
Addl. CIT v. Shubhlaxmi Mills Ltd. [1975] 100 ITR 188 (Guj.),
West Laikdihi Coal Co. Ltd. v. CIT [1973] 87 ITR 501 (Cal.),
CIT v. Modi Spg. & Wvg. Mills Co. Ltd. [1973] 89 ITR 304 (AIL),
Indian Overseas Bank Ltd. v. CIT [1970] 77 ITR 512 (SC),
Dodballapur Spg. Mills Ltd. v. CIT [1980] 121 ITR 94 (Kar.),
Indian Oil Corpn. Ltd. v. S. Rajagopalan, ITO [1973] 92 ITR 241 (Bom.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
33(1),
34(3)(a)
|