1975 (1) TMI 7

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....a reference under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "). The assessee is a limited company. The assessment year involved is 1966-67 of which the previous year is the calendar year ending on 31st December, 1965. In the previous year relevant to the assessment year 1964-65, the assessee had set up two new industrial units, namely, a fluorescent lamp m....

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....ued, in a corresponding increase or decrease, as the case may be, in the capital employed in the business. " In accordance with this provision, the assessee claimed that the profits arising from the two undertakings in the relevant previous year should be added in the computation of the total capital for the purposes of relief under section 84 of the Act. The Income-tax Officer did not accept t....

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....sts as if the assessee had claimed only half of the profits earned during the previous year relevant to the assessment year 1966-67 as forming part of its total capital. This is not correct. The assessee had claimed the entire profits and the Income-tax Officer had disallowed the claim in toto. During the assessment year 1964-65, the assessee had similarly claimed the entire profits as forming par....

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....bunal was right in holding that in accordance with rule 19(5) of the Income-tax Rules, 1962, the profits earned from the two new undertakings during the previous year relevant to the assessment year 1966-67 were to be included in the computation of the capital employed in the two new industrial undertakings ? " We have extracted rule 19(5) above which clearly provides that the profits earned fr....