Taxing computation under rule 3(a): added-back amount tracks the original deduction from inter-valuation surplus, not the annual average.

In construing the second proviso to rule 3(a), the Bombay HC stated that the amount to be added back is measured by the deduction actually allowed from the surplus of the inter-valuation period, not by the annual average surplus. The scheme required surplus to be computed for the whole inter-valuation period first, with the annual average derived only afterwards, so the later restoration operates by reference to the original deduction. The court also emphasised that taxing language must be given its plain meaning, and equitable considerations cannot alter the statutory computation.

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Issues: Whether, for the assessment year 1951-52, the amount to be added back under the second proviso to rule 3(a) was the entire deduction actually allowed in the assessment for 1950-51 or only one-fifth of one-half of that amount.

Analysis: The relevant scheme required the surplus to be found first for the whole inter-valuation period and only thereafter the annual average was to be derived under rule 2(b). The deduction under rule 3(a) was made from the surplus itself, not from the annual average surplus. The second proviso to rule 3(a) referred back to the amount previously allowed as a deduction and directed that the proportion of that amount, as the case may be, should be treated as part of the surplus for the period in which the amount ceased to be reserved. The amendment introducing the words "one-half or four-fifths, as the case may be" was construed as a consequential change reflecting the proportion of the original deduction actually allowed. In a taxing provision, the words had to be given their plain meaning, and equitable considerations could not control the computation.

Conclusion: The amount liable to be added back was the entire deduction actually made under rule 3(a) in the assessment for 1950-51, and not merely one-fifth of one-half of that amount.

Ratio Decidendi: Where a taxing rule requires a deduction to be made from the surplus of the inter-valuation period, any amount later ceasing to be reserved must be added back to the same extent as the deduction actually allowed, and the annual average of the surplus cannot be substituted for the statutory surplus for that purpose.

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