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TMI Blog1992 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... tion claimed by the assessee as per books of accounts and not the entire accumulated difference including the earlier years also. In this connection, the CST(A) followed the decision of the Tribunal, Pune Bench, in the assessee's own case in 2/PN/86 dated 24-11-1988.The CST(A) also held that the capital employed should not be proportionately reduced under Rule 4 of the Second Schedule to the Companies Surtax Act, 1964 to the deductions allowed under Chapter VIA of the Income-tax Act, 1961. In this connection, he has relied on the decision of the Bombay High Court in the cases of CIT v. Century Spg. Mfg. Co. Ltd. [1978] 111 ITR 6 and CST v Ballarpur Industries Ltd. [1979] 116 ITR 528. Revenue has taken two specific grounds against the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Chapter VIA of the Income-tax Act was not correct. In this connection, he has relied on the judgment of the Bombay High Court in the case of Century Spg. Mfg. Co. Ltd. and Ballarpur Industries Ltd. 4. At the time of hearing, the learned counsel for the assessee filed a chart or statement of depreciation as per Income-tax orders and as per books according to which difference between depreciation actually allowed as per Income-tax Act and as per books amounted to Rs. 7,81,971 and ,Rs. 13,98,225 respectively on the beginning of the accounting year relevant for the assessment years 1985-86 and 1986-87. Referring to the order of the Tribunal, Pune Bench, in the assessee's own case in STA No 2/PN/86 dated 24-11-1988, it was urged that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bombay High Court held that the difference between the amount of depreciation actually allowed to the assessee as per Income-tax Rules and the amount of depreciation actually provided in the books of accounts formed part of the general reserve and this difference was diverted as forming part of the general reserves. It is for this reason that their Lordships have held at page 223 of the judgment as follows : "Thus, on a plain interpretation of the language used in clause (iii) of rule 1 of the Second Schedule to the Act, it is quite apparent that if the amount of depreciation provided in the books of the assessee-company for a particular year is less than the amount of depreciation actually allowed by the ITO for computation of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no force in the ground taken by the revenue in this regard. 7. Coming to the application of Rule 4 of the Second Schedule to Surtax Act, here again we find that the action of the Assessing Officer is not justified in law and the CST(A) is quite justified. On the other hand, in view of the judgment of the Supreme Court in the case of Stumpp Schuele Somappa (P.) Ltd. wherein their Lordships have upheld the judgment of the Karnataka High Court in the case of Second ITO v. Stumpp Schuele Somappa (P.) Ltd. [1977] 106 ITR 399 holding that the reliefs allowed under section 80-1 (priority industry) and section 80J (newly established industrial undertaking) of the Income-tax Act, 1961 were not " income, profits and gains not includible in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of Chapter III of the Income-tax Act, 1961 which deals with incomes which do not form part of the total income. Therefore, it has been made clear that there is no specific provision in the Surtax Act for making any adjustment in respect of relief under sections 80-I, 80J in Schedule I. The expression " part of income, profits and gains not includible in the total income " in Rule 4 of the Second Schedule cannot be construed or understood as referring to deductions, allowances, etc., made under the Income-tax Act for purposes of computation of total income. Their Lordships have emphasised the fact that it is " impossible to put such a construction ". Referring to Chapter VII of the Income-tax Act and the substitution of new Chapter VIA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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