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TMI Blog1978 (7) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... wing a deduction of Rs. 1,59,240 under s. 80-I of the I.T. Act, 1961. The said sum of Rs. 1,59,240 represented 8% of the assessee's profits attributable to its priority industry. In the assessment of the assessee for the same assessment year under the C. (P.) S.T. Act, 1964, the ITO computed its capital in accordance with the Second Schedule to the Act for the purpose of determining the statutory deduction to be allowed from the chargeable profits. Rule 4 of the Second Schedule to the said Act requires that where a part of the income, profits and gains of a company is not includible in the total income as computed under the I.T. Act, its capital shall be the sum ascertained in accordance with rr. 1, 2 and 3 of the said Schedule as diminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82 ITR 50. The department then filed an appeal. The Tribunal held that the mistake was apparent and patent and, therefore allowed the appeal. The Tribunal also held that the proportion of the profits and gains attributable to priority industry which was deductible under s. 80-I of the I.T. Act, 1961, in the computation of the total income in the income-tax assessment was not " includible " in the total income so as to attract the said rule and, therefore, the capital of the assessee was liable to be proportionately diminished under r. 4 of the Second Schedule to the C. (P.) S.T. Act, 1964. Thereafter the Tribunal, at the instance of the assessee, referred the following questions to this court : " (1) Whether, on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for us to express any opinion on it, for, in our opinion, question No. 1 is a pure academic question in view of our answer to question No. 2 as hereinafter stated. Mr. Ajit Sengupta, learned counsel for the revenue, argues that the view taken by the Tribunal is the only view that can be taken on the interpretation of r. 4 to the Second Schedule of the C. (P.) S.T. Act, 1964, and there cannot be two conceivable views on it. But the Karnataka High Court in the case of Stumpp, Schuele Somappa Pvt. Ltd. v. 2nd ITO [1976] 102 ITR 320 has taken a diametrically opposite view and, therefore, the case cannot come within the ambit of s. 13 of the C. (P.) S.T. Act, 1964, and, accordingly, we answer question No. 2 in the negative and in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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