1993 (9) TMI 27

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.... from various villages and, after some processing, the milk is distributed to the consumers. It also produced butter and ghee. The assessment was completed by the Income-tax Officer and, as per the order dated March 19, 1976, the loss of Rs. 5,29,880 was determined. The assessee, inter alia, claimed that the value of assets of Rs. 10,92,237 purchased out of Government grants and loans should be included in the computation of capital employed. The assessee also contended that half of the profits earned by the assessee during the accounting year relevant to the assessment year under consideration should be added to the aggregate value of the assessee's assets. Both the contentions are rejected by the Tribunal. Thereafter, at the instance of t....

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....l undertaking in respect of the previous year relevant to the assessment year is to be allowed. The capital employed is to be computed in the manner specified in sub-section (1A). Clause (I) of sub-section (1A) provides that the capital employed in an industrial undertaking or the business of a hotel shall, except as otherwise expressly provided in this section, be computed in accordance with clauses (II) to (IV) and the capital employed in a ship shall be computed in accordance with clause (V). For the purpose of this reference, the relevant provision is clause (II)(i) and Explanation 3, which are as under : "(II) The aggregate of the amounts representing the values of the assets as on the first day of the computation period of the unde....

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....ers' Union Ltd. [1979] 116 ITR 319 and held that the assessee was not entitled to take into account the amount of grant-in-aid given by the Government in the computation of the capital employed by the assessee for the purchase of machinery. In this view of the matter, it can be held that the Tribunal was right in holding that while computing the capital employed by the assessee for the purpose of section 80J of the Income-tax Act, the Government grant should not be taken into account. However, with regard to the loan, there is no discussion by the Tribunal. It is mentioned in the order that the assessee had been paid by the Government certain amounts by way of repayable loan and another amount by way of outright grant. It is also mention....