1991 (4) TMI 34

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..... nt years 1967-68 to 1972-73, the Tribunal has referred to this court the following question of law for our opinion under section 256(1) of the Income-tax Act, 1961, as applied to surtax tinder section 18 of the Companies (Profits) Surtax Act, 1964 : " Whether, on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in holding that the amount of Rs. 1 la .....

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..... or otherwise. The shares were, accordingly, allotted and the technical designs and know-how obtained by the assessee under the agreement were shown as part of the fixed assets of the assessee-company in its balance-sheet at the value of Rs. 1 lakh representing the par value of the shares allotted to the two companies. It is common ground that, in the income-tax assessment for the relevant years, t .....

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..... took the view that, in so far as the assessee had issued shares of the face value of Rs. 50,000 each to the aforesaid two companies, and had created an asset in the form of designs and drawings, the capital was brought into existence by creating a book asset and, therefore, to this extent, the share capital was required is to be reduced. The assessee's appeals were allowed by the Income-tax Appel .....

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..... tation. He reiterated that the shares in the aforesaid two companies of the face value of Rs. 50,000 each were issued without equal money being received from them and book assets only meant an asset reflected in the books. Drawings and designs, lie further stated, are reflected in the assessee's books. Shri Mehta, learned counsel for the assessee, On the other hand, strongly relied on the order of .....

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..... to mention that the Tribunal has made very wide observations in the case but we need not go that far. In our view, an asset actually purchased does not fall within the Explanation as in this case. It cannot be said that book asset was created to bring capital into existence. Ordinarily, that would mean that an asset which is not in fact an asset is created to bring capital into existence. Accordi .....

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