1992 (11) TMI 39

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....Under rule 19(3), as then in force, "any borrowed monies and debts due" by the assessee shall be deducted while computing the capital employed in an undertaking. The Department contended before the Tribunal that the computation of money borrowed and debts due should not have been done as at the end of the relevant accounting period, but the value of the liability in this regard should have been taken on an average basis. This contention has been negatived by the Tribunal. The assessee had also contended that only the debts due and payable by the assessee at the end of the relevant accounting period should be deducted under rule 19(3) while computing the capital of the company and not debts which may be owing by the assessee but which had....

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....ssets which constitute the capital employed in a new industrial undertaking. Under rule 19(1)(a), there is an express provision to the effect that, in the case of assets acquired by purchase, if such assets were acquired on or after the commencing date of the computation period, their average cost during the said period should be taken into account. This sub-rule deals with assets which are entitled to depreciation. Similarly, under sub-rule (b) which deals with assets acquired by purchase but which are not entitled to depreciation, there is a similar provision that, if such assets are acquired on or after the commencing date of the computation period, their average cost during the said period should be taken into account. Under rule 19(1)(....

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....uction, the average should be taken of the debts due by the assessee cannot be accepted. There is no such provision for averaging under rule 19(3). Question No. 1, therefore, is answered in the affirmative and in favour of the assessee. As far as the second question is concerned, in the case of CIT v. Boots Pure Drug Co. (I.) Ltd. [1993] 203 ITR 979 (Bom), being Income-tax Reference No. 184 of 1977 decided by us on October 21, 1992, we have held for reasons set out therein that, under section 84 read with rule 19, deduction is required to be made in respect of all borrowed monies irrespective of whether the amount is owing or due as well as in respect of all other debts which are due for payment as at the end of the accounting period,....