1996 (7) TMI 34

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... original return itself warranting reopening of the assessment under section 147(a) of the Income-tax Act ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal had materials before it in restricting the capitalisation of the pre-production expenses to 50 per cent. of such expenses?" The assessment year is 1981-82. The assessee is a company in which the public are not substantially interested. It was set up some time in 1976 to manufacture the products out of latex available in the neighbourhood with the main object to establish and carry on business in the manufacture and sale of goods from natural rubber latex specified in the memorandum of association. There was one ancillary object also in regard to the bus....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ted or installed and therefore there was no question of such expenses to be taken into account for the computation of capital gains. In the reopened proceedings the Income-tax Officer took into consideration the cost of machinery at Rs. 8,33,337, interest paid to the Kerala Financial Corporation at Rs. 1,13,244 and, with regard to the capitalised pre-production expenses of Rs. 3,09,106, on estimate basis Rs. 30,000 came to be taken and not Rs. 3,09,106 as was claimed. The question is whether the authorities were justified to hold that there was failure on the part of the assessee to disclose all primary facts relating to the purchase, sale and computation of capital gains in respect of the machinery in question. We find that with r....