TaxTMI 
TaxTMI 
1988 (7) TMI 50
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.... the relevant year was allowable in the computation of income of the assessee for the assessment year 1971-72 and in that view was justified in not confirming the order of the Commissioner of Income-tax ?" The facts relating to this application are that the assessee, the United, Commercial Bank Ltd. (in Members' Voluntary Liquidation), was doing banking business being incorporated under the Companies Act, as a public limited company in India as well as outside India. It had three branches in Malaysia. The assessee-company was nationalised and its business was taken over by the Government of India on July 19, 1969. The business in Malaysia was allowed to continue and the foreign business was taken over by the Government on January 1, 1971....
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....nal, therefore, held that the assessee was entitled to deduction of Rs. 16,36,398. The Revenue, being aggrieved by the said order, made an application before the Tribunal for referring certain questions of law to this court for opinion. The Tribunal, by its order dated March 4, 1986, rejected the said application on the ground that from the finding of the Tribunal, no question of law did arise and as such the said reference application was rejected. Thereafter, the assessee moved this application under section 256(2) of the Income-tax Act, 1961, and obtained a rule on the question mentioned hereinbefore. It appears that the Reserve Bank of India wrote a letter to the Chairman, United Commercial Bank Ltd., on March 11, 1971, which reads a....
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....after making provision for certain debts on account of accrued gratuity liability to the local staff in accordance with the provisions of the relevant agreement in this behalf, advances which are treated as bad or doubtful of recovery (according to a recent evaluation based on the books of your Malaysian branches), certain other minor items debitable to the profit and loss account (bonus to India based officers, interest payable to the corresponding new bank, development tax and legal expenses and item in suspense) and charges payable to the corresponding new bank for the management and administration of the Malaysian branches (at a nominal) amount of two lakhs of Malaysian dollars, the revised surplus of your Malaysian branches amounts is ....
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.... undertaking, business, assets and liabilities of the Malaysian branches of your company. 4. We now suggest that in order to enable us to proceed further with the formation of a new Malaysian company and the transfer of the business of your Malaysian branches to that company, your board of directors may pass a resolution on the lines of the draft which is forwarded herewith. 5. We shall be glad if you could kindly arrange for a meeting of your board of directors as soon as possible and let us have a copy of the resolution as passed. We shall then arrange in order to simplify the procedure from your point of view for the corresponding new bank to make a formal offer in these forms to your bank." On May 18, 1971, the United Commercia....