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Commissioner of Income-tax Vs. A.S. Kuppa Ammal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case Nos. 241 of 1966 and 44 of 1967
Judge
Reported in[1972]85ITR633(Mad)
ActsIncome Tax Act, 1922 - Sections 10(2)
AppellantCommissioner of Income-tax
RespondentA.S. Kuppa Ammal
Appellant AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Respondent AdvocateS. Swaminathan and ;K. Ramgopal, Advs.
Cases ReferredP. Appavu Pillai v. Commissioner of Income
Excerpt:
- .....loss of account books, the assessee prepared ledgers without day books and made out a profit and loss account for the years 1958-59 and 1959-60 based on such ledgers. inthe ledgers prepared by him, he had provided for a reserve of development rebate for various years from 1955-56. for the assessment years in question, the assessee claimed development rebate under section 10(2)(vib) of the indian income-tax act, 1922. the income-tax officer, while considering the said claim, held that the assessee is not entitled to the development rebate claimed by him, as he has not complied with the provisions of explanation 2 to section 10(2)(vib) of the act. according to the income-tax officer, the development rebate reserve has not been shown to have been made in the books of account of the.....
Judgment:

Ramanujam, J.

1. These two cases are connected and they relate to assessment years 1958-59 and 1959-60, respectively. The assessee is common in both the cases. He was carrying on transport business, in addition to running a rice and flour mill and a cinema theatre. In this case, we are concerned with the assessee's business in transport. The assessee's account books relating to his transport business were burnt in a fire accident on November 19, 1958, and this fact has not been disputed by the revenue at any stage. In view of the loss of account books, the assessee prepared ledgers without day books and made out a profit and loss account for the years 1958-59 and 1959-60 based on such ledgers. Inthe ledgers prepared by him, he had provided for a reserve of development rebate for various years from 1955-56. For the assessment years in question, the assessee claimed development rebate under Section 10(2)(vib) of the Indian income-tax Act, 1922. The Income-tax Officer, while considering the said claim, held that the assessee is not entitled to the development rebate claimed by him, as he has not complied with the provisions of Explanation 2 to Section 10(2)(vib) of the Act. According to the Income-tax Officer, the development rebate reserve has not been shown to have been made in the books of account of the assessee. The assessee appealed to the Appellate Assistant Commissioner who confirmed the view taken by the Income-tax Officer. On appeal, the Tribunal, however, came to a different conclusion. The Tribunal, following the decision of this court in P. Appavu Pillai v. Commissioner of Income-tax, : [1965]58ITR622(Mad) held that there was sufficient compliance with the provisions of Explanation 2 to Section 10(2)(vib) and that the assessee is entitled to the claim of development rebate. At the instance of the revenue the following questions have been referred to us for decision :

'Whether, on the facts and in the circumstances of the case, the assessee was entitled to the development rebate in respect of buses and new diesel engines fitted to the buses

Whether, on the facts and in the circumstances of the case, the Tribunal was right in granting development rebate of Rs. 85,197 for the asssssment year 1959-60 ?'

2. On a reading of Explanation 2 to Section 10(2)(vib) of the Act, we are satisfied that the decision of the Tribunal is correct in this case. Explana-tion 2 does not make any reference to books of account maintained by an assessee. It merely postulates the claim for development rebate being made, only when 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 him during a period of ten years next following for the purposes' of the business of the undertaking. In this case, the assessee has produced profit and loss account and its accuracy has not been questioned. The assessee's books of account have admittedly been lost and he is not, therefore, in a position to produce the same. The mere fact that day books, etc., are not available cannot make the profit and loss account filed by him not reliable for the purpose of application of section 10(2)(vib). As a matter of fact in P. Appavu Pillai v. Commissioner of Income-tax, while construing the scope of Section 10(2)(vii), which provides that the amount of allowance claimed should actually be written off in the books of the assessee, this court expressed the view that it is not necessaryfor an assessee to maintain all books of account, but that it is sufficient if he has maintained such accounts from which it could be found that actually the value of machinery has been written off. From the above decision, it is seen that, even in a case where there is a statutory requirement as to the proper entries being made in the regular books of account, the view was taken that the maintenance of day books and ledger, etc., as usually done by business men, is not indispensable. The case before us is an a fortiori one. It does not appear to be one where such a statutory requirement is provided, for, Explanation 2 to Section 10(2)(vib) does not insist on the existence or maintenance of regular books of account as such. It only provides that a development rebate reserve should have been provided for by the assessee as required therein to sustain a claim for development rebate. There is no reference to account books therein and, therefore, the profit and loss account produced by the assessee, the genuineness or accuracy of which has not been disputed by the department, has to be taken as entitling the assessee to the benefit of that provision. The result is that the questions referred to us in both the tax cases are answered in favour of the assessee and against the revenue. The assessee will have his costs in T.C. No. 44 of 1967. Counsel's fee Rs. 250. There will be no order as to costs in T.C. No. 241 of 1966.


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