1988 (9) TMI 31

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....his is a reference at the instance of the Revenue and the following two questions stand referred to us by the Income-tax Appellate Tribunal, Bombay Bench 'E', under section 256(1) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the proportionate reduction in the capital on account of relief under sections 80-1....

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....8. We shall, therefore, proceed to answer the said question in accordance with the said decision in the affirmative and in favour of the assessee. That brings us to a consideration of question No. (2). As far as this question is concerned, the relevant discussion is to be found in paragraphs 5, 6, and 7 of the appellate order of the Income-tax Appellate Tribunal. We are concerned with two asses....

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....6 30-9-1969 1970-71 1,28,243 30-9-1970 1971-72 2,00,795 ------------------ Total : Rs. 5,15,024 (1972 - 73 Assessment year)" ------------------ It was stated before the Tribunal, and which position was accepted by the Department, that the bonus paid by the assessee had been, for these two years, separately and independently debited to the profit and loss account and the bonus res....

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....tions are not essential for our purposes. Since the Tribunal had found on a perusal of the balance-sheet that the bonus reserve had no co-relation to the actual payment of bonus nor had it been utilised for payment of bonus, it was right in holding that the bonus reserve could not be excluded from the computation of capital and it was, therefore, correct in upholding the Appellate Assistant Commis....