9911796707
TMI Blog1979 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... count relevant to the present asst. yr. 1974-75 runs from 1st April, 73 to 31st March, 74. For the said year, the assessee-firm computed as the capital employed in the industrial undertaking as follows: Fixed assets as on 31st March, 1973 2,03,565.00 Closing stock " 31,08,358.38 Sundry Debtors " 4,11,895.41 Bank balance as on Oriental Bank of . Commerce, Faridabad 1,365.42 State Bank of India, Ballabhgarh 586.21 Vijaya Bank Ltd., Delhi 726.60 Cash at hand 6,790.05 Total capital employed 37,33,257.07 The assessee firm claimed deduction at 6 per cent of the aforesaid amount of Rs. 37,33,257 i.e. in the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital by the amount of the debts owned by the assessee-firm observing that this did not constitute borrowed capital. The AAC followed the decision of the Hon'ble Calcutta High Court reported in 107 ITR 909 (wherein the earlier decision of the Hon'ble Calcutta High Court in 107 ITR 123 is also referred) and computed the capital employed in the industrial undertaking as follows; "Aggregate of the amounts representing values of the assets as admitted by the appellant and as accepted by the ITO. 37,33,257.00 Debts: Debts owned by the appellant as these are not borrowed capital . . Development rebate reserve 6,100.00 . Central sales-tax 67,375,00 . Outstanding wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Calcutta High Court reported in 107 ITR 909. The AAC has however, taken the view that the following four items of liabilities appearing in the balance sheet of the assessee firm, did not constitute borrowed moneys but constituted "debt owned by the assessee" and that such debts were required to be deducted in arriving at the capital employed in the industrial undertaking: Development rebate reserve 6,100.00 Central Sales-tax 67,375.00 Outstanding Wages 62,588.00 Sundry creditors 12,11,254.00 . 13,47.317.00 In the case of Century Enka Ltd.(1) from the aggregate of the amounts representing values of the assets in the amount of Rs. 6,90,26,628, the ITO had deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets should be taken as the capital in the industrial undertaking without any deduction in respect of any liability. In conformity with the view so expressed by the Special bench of the Tribunal, we hold that the AAC was in error in reducing the aggregate of the amounts representing the values of the assets of Rs. 37,33,257 by the amount of the current liabilities and provisions of Rs. 13,47,317. In fact, the development rebate reserve of Rs. 6,100 is a reserve and does not represent either borrowed monies or debts owned by the assessee and the AAC was in error also on the score in excluding the said amount from the capital employed in the industrial undertaking. In terms of the view taken by the Special bench of the matter, we hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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