COMMISSIONER OF INCOME TAX Vs. HOECHST PHARMACEUTICAL LIMITED

JUDGEMENT

(1.) THIS is an application under S. 256(2) of the IT Act, 1961, for asking the Tribunal to state a case and raise the following question of law :

(2.) THE question relates to the calculation of capital employed in an industrial undertaking for the purpose of S. 80J of the IT Act, 1961. This calculation has to be made in accordance with the provisions of r. 19A of the IT Rules, 1962. Under sub rule (3) of r. 19A, in computing the value of capital employed, amounts due towards any liability in respect of tax are to be deducted.

(3.) MR . R. J. Joshi, learned counsel for the Department, drew our attention to a decision in the case of CWT vs. Arvindbhai Chinubhai (1981) 24 CTR (Guj) 228 : (1982) 133 ITR 800 (Guj), to the effect that for the purpose of wealth tax the amount of advance tax paid cannot be considered as an asset. It is true that advance tax paid is not an asset for the purpose of wealth tax. And it is also possible that advance tax paid may not be counted as an asset for the purpose of r. 19A of the IT Rules, 1962. In the present case, however, the entry on the "assets" side when r/w the corresponding entry on the "liabilities" side correctly shows that the total liability to pay tax stands reduced by the amount of advance tax paid. Instead of these entries, it would have been legitimate for the assessee to have shown on the " liabilities side the tax liability as reduced by the advance tax paid. In the present case, instead of showing the reduced liability for payment of tax in this manner, the full liability has been shown ; and on the "assets" side the amount of advance tax paid has been shown. This, however, makes no difference to the net result. In our view, therefore, the capital employed in the present undertaking for the purpose of S. 80J of the IT Act, 1961, has been correctly calculated.