1987 (2) TMI 47

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...., 1980, and to give a direction to the Income-tax Officer to compute the relief under section 80J of the Act in a particular manner? (2) Whether in granting relief under section 80J, borrowed capital is also to be included in the 'capital employed'? " This reference relates to the assessment year 1977-78. The facts in brief are that the assessee was assessed by the Income-tax Officer by order dated May 31, 1978. The assessee was given relief in terms of section 80J of the Act read with rule 19A of the Income-tax Rules (hereinafter to be referred to as "the Rules"). After some time, the Commissioner, Income-tax Department, being of the view that the order of assessment was wrong and prejudicial to the Revenue, issued notice dated Ma....

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....e 19A of the Rules in so far as it excluded borrowed monies and debts in the computation of the employed and provided for computation of the 'capital employed' as on the first day of the computation period was not ultra vires, section 80J of the Act was a perfectly valid rule within the rule making authority conferred upon the Central Board of Revenue. The supreme Court thus in clear terms overruled the contention that rule 19A of the Rules was ultra vires the Constitution. Rule 19A having been found to be good law, it obvious that the assessing officer had erred in law and that error, on the face of it, was prejudicial to the Revenue. In that view of the matter, it has to be held that the Commissioner of Income-tax, Bihar No. II, Ranchi, h....