COMMISSIONER OF INCOME TAX Vs. INDUSTRIAL PERFUMES LIMITED

JUDGEMENT

(1.) THE assessee is M/s. Industrial Perfumes Ltd., Bombay. For the assessment year year 1961 -62, the ITO computed the capital employed in the new industrial undertaking of the assessee -company for the purpose of granting partial exemption from tax under s. 15C of the Indian I.T. Act, 1922, at Rs. 13,33,902. It included a sum of Rs. 1,39,113 being the average profit of the assessee -company for the previous year relevant to the assessment year 1961 -62. The calculation of the capital employed in the new undertaking was made in accordance with the provisions of r. 3(6) of the Indian Income -tax (Computation of Capital of Industrial Undertakings) Rules, 1949.

(2.) ON January 21, 1963, the ITO rectified the computation of the capital employed in the new undertaking of the assessee by holding that profits or losses during a given period would be automatically reflected in the assets of the business. Hence, there was no reason for adding separately the average amount of profit to the capital so calculated. He, accordingly, deleted the sum of Rs. 1,39,113 from the calculation of the capital and computed it at Rs. 11,29,789.

(3.) THE question referred to us, viz., whether, on the facts and circumstances of the case, the order passed under s. 154 of the I.T. Act, 1961, for the assessment year 1962 -63 is valid in law is answered in the negative that is, in favour of the assessee and against the Commissioner. The application to pay to the respondents the cost of this reference.