1978 (7) TMI 52

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....me of the assessee for the relevant previous year at Rs. 27,65,443 after allowing a deduction of Rs. 1,59,240 under s. 80-I of the I.T. Act, 1961. The said sum of Rs. 1,59,240 represented 8% of the assessee's profits attributable to its priority industry. In the assessment of the assessee for the same assessment year under the C. (P.) S.T. Act, 1964, the ITO computed its capital in accordance with the Second Schedule to the Act for the purpose of determining the statutory deduction to be allowed from the chargeable profits. Rule 4 of the Second Schedule to the said Act requires that where a part of the income, profits and gains of a company is not includible in the total income as computed under the I.T. Act, its capital shall be the sum....

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....cision of the Supreme Court in the case of T. S. Balaram v. Volkart Bros. [1971] 82 ITR 50. The department then filed an appeal. The Tribunal held that the mistake was apparent and patent and, therefore allowed the appeal. The Tribunal also held that the proportion of the profits and gains attributable to priority industry which was deductible under s. 80-I of the I.T. Act, 1961, in the computation of the total income in the income-tax assessment was not " includible " in the total income so as to attract the said rule and, therefore, the capital of the assessee was liable to be proportionately diminished under r. 4 of the Second Schedule to the C. (P.) S.T. Act, 1964. Thereafter the Tribunal, at the instance of the assessee, referred....