COMMISSIONER OF INCOME TAX Vs. GREAVES FOSECO LIMITED

JUDGEMENT

(1.) UNDER S. 256(1) of the IT Act, 1961, r/w S. 18 of the Companies (Profits) Surtax Act, 1964, the Tribunal has referred the following question at the instance of the Revenue for the opinion of this Court :

(2.) IN the assessment originally framed, the ITO had computed the capital as per the provisions of the Second Schedule to the Surtax Act by taking the figure of "general reserve" as on the first day of the relevant accounting year. Thereafter, he initiated proceedings under S. 13(1)/14(1) of the Surtax Act with a view to reduce the "general reserve" by the amount of proposed dividend. It appears from the records that the ITO has not stated any basis for taking action under S. 13(1)/14 (1) of the Act. Before the Tribunal, it was submitted on behalf of the assessee with the help of certain decisions of this Court in CIT vs. Marrior (India) Ltd. (supra) and Shree Ram Mills Ltd. vs. CIT (supra), that the ITO could not have taken action under S. 13(1)/14(1) of the Surtax Act, as there was no mistake apparent from the record or, in any event, the mistake was such which could not be resolved without long drawn process of arguments and debate. It was, therefore, urged that the orders passed by the ITO under S. 13(1)/14(1) of the Surtax Act should be cancelled. The 0Tribunal accepted the stand taken by the assessee and cancelled the orders passed by the ITO under S. 13(1)/14(1) of the Surtax Act.

(3.) ON due consideration of the submissions of the parties and in view of the aforesaid decision of the Supreme Court, this reference has to be answered in favour of the assessee and against the Revenue. We, therefore, answer the question accordingly. No order as to costs.