1993 (6) TMI 43

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..... T. NANAVATI J.-At the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following two questions under section 256(1) of the Income-tax Act, 1961, to this court for its opinion : "1. Whether, on the facts and in the circumstances of the case, six per cent. of the capital employed should be deducted for the full year even though the undertaking had worked for seven months .....

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..... ed the liabilities and debts. The Income-tax Officer computed the capital employed as per rule 19A of the Income-tax Rules. Therefore, aggrieved by the order passed by the Income-tax Officer, the assessee preferred an appeal to the Appellate Assistant Commissioner. As regards full deduction at the rate of 6 per cent. of the capital employed, the Appellate Assistant Commissioner, relying upon the .....

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..... Tribunal did not record any finding thereon and dismissed the appeal. The Revenue, therefore, made an application to the Tribunal for referring the following three questions to this court : " 1. Whether, on the facts and in the circumstances of the case, and having regard to the condition imposed by the Income-tax Officer for allowing the assessee to change the period of accounting, the Income- .....

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..... n No. 1 is concerned, the point raised by it is settled by the decision of this court in CIT v. Sarabhai Sons Ltd. [1983] 143 ITR 473 and in fact the Board had also issued a circular explaining how the phrase "per annum" has to be construed. The said circular was issued by the Board on March 3, 1982. Question No. 1, therefore, will have to be answered in the affirmative, that is, against the Reven .....

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..... the Supreme Court and the decision of this court, we are of the view that the Tribunal was not right in holding that the capital employed for the purpose of section 80J should be arrived at without deducting the liabilities and debts. Question No. 2 is, therefore, answered in the negative, that is, in favour of the Revenue and against the assessee. In the result, question No. 1 is answered in th .....

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