Bombay High Court
Commissioner Of Income-Tax vs Indian Dyestuff Industries Ltd. on 26 February, 1991
Equivalent citations: [1991]191ITR168(BOM)
JUDGMENT T.D. Sugla, J.
1. In this departmental reference relating to the assessee's surtax assessment for the assessment years 1970-71 and 1971-72, the Income-tax Appellate Tribunal has referred to this court only one question of law under section 256(1) of the Income-tax Act, 1961. The question reads thus :
"Whether, on the facts and in the circumstances of the case, the amount of Rs. 19,97,065 transferred to the "General Reserve No. I" account was includible in the capital computation base of the assessee-company within the meaning of rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for each of the accounting periods relevant to the assessement years 1970-71 and 1971-72 ?"
2. There is no dispute that the amount of Rs. 19,97,065 involved herein represents the amount of depreciation actually allowed but not debited in the books of account originally and that this amount was transferred to the general reserve account in the year 1969-70. There is also no dispute that the assessee was originally debiting depreciation in its books following its method of claiming depreciation to the written down value method in place of the straight line method. Having done so, it passed the entry of Rs. 20,43,872 under the head "Depreciation reserve". It is out of this depreciation reserve that the amount of Rs. 19,97,065 was transferred to General Reserve No. I account in the year 1969 which is in dispute before us.
3. On these facts, we find that the judgment of our court in the case of CIT. v. Zenith Steel Pipes Ltd. [1978] 112 ITR 215, is fully applicable. In facts, it was fairly stated by Shri Dwarkadas for the assessee that the Tribunal had relied upon its order in that case for the purpose of taking the view it took. Since that decision has been reversed by our court in the case (supra), we have no difficulty in answering the question in the negative and in favour of the Revenue. The question is so answered. There will be no order as to costs.