1996 (6) TMI 109

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.... assessee company provided liability for taxation on the basis of book profits declared. The Deputy Commissioner of Income-tax has reduced the capital employed by taking into account the income-tax which has been finally determined on the basis of the assessment. This interpretation of the Deputy CIT which has been confirmed by the Commissioner of (Appeals) is not in accordance with the law and, therefore, the deduction made from the capital employed is against the law and facts of the case." 2. The Assessing Officer reduced a sum of Rs. 4,95,739 from the "capital employed" vis-a-vis the difference between the provision made for taxation and the actual tax liability as per the revised assessment completed on30th April, 1990(Rs. 36,01,639 m....

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....f the nature of item (9) aforesaid, means the amount of dividend declared or paid by the company, on or after the 1st day of the previous year relevant to the assessment year, for the previous year immediately preceding the first mentioned previous year." 4. A further reference to the Companies Act, 1956 shows that item (8) pertains to the Income-tax liability whereas item (9) pertains to the liability on account of dividends. In the Explanation it has been categorically stated that the amount which is considered as reasonable vide item (4) would mean the amount of dividend declared or paid by the company on or after the first day of the previous year relevant to the assessment year, for the previous year immediately preceding the first me....

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....rther facts which emerged after the date of the order of the Assessing Officer pertained to the order of the Commissioner of Income-tax (Appeals) dated 18th January, 1991 and the order of the Tribunal dated 27th June, 1994 the net result being the reduction of the income to Rs. 55,16,580 and Rs. 53,05,618 respectively and the tax liability being quantified at Rs. 34,75,445 and Rs. 33,42,539 respectively. 6. It was the assessee's case before us that the rule only provided a reasonable figure to be credited as a provision vis-a-vis the final assessed figure and there was no stipulation in law to substitute the tax liability as assessed and add thereby the difference. On the basis of the aforesaid argument and relying upon the judgment of the....