SHUBHLAXMI MILLS LIMITED vs ADDITIONAL COMMISSIONER OF INCOME-TAX,GUJARAT

The Supreme Court held that under Section 33(1) and Section 34(3)(a) of the Income Tax Act, 1961, a reserve fund must be created in the relevant previous year to claim a development rebate. The Court clarified that the deduction cannot be allowed unless the necessary debit and credit entries are made in the profit and loss account and reserve account, respectively, in the year of installation or first use of the machinery. The appeal was dismissed as the appellant failed to comply with these statutory requirements.