1979 (4) TMI 44

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.... computation of capital employed in the industrial undertaking. 2. The year of account relevant to the present asst. yr. 1974-75 runs from 1st April, 73 to 31st March, 74. For the said year, the assessee-firm computed as the capital employed in the industrial undertaking as follows: Fixed assets as on 31st March, 1973 2,03,565.00 Closing stock " 31,08,358.38 Sundry Debtors " 4,11,895.41 Bank balance as on Oriental Bank of . Commerce, Faridabad 1,365.42 State Bank of India, Ballabhgarh 586.21 Vijaya Bank Ltd., Delhi 726.60 Cash at hand 6,790.05 Total capital employed 37,33,257.07 The assessee firm claimed deduction at 6 per cent of the aforesaid amount of Rs. 37,33,257 i.e. in the a....

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....wed capital. The AAC followed the decision of the Hon'ble Calcutta High Court reported in 107 ITR 909 (wherein the earlier decision of the Hon'ble Calcutta High Court in 107 ITR 123 is also referred) and computed the capital employed in the industrial undertaking as follows; "Aggregate of the amounts representing values of the assets as admitted by the appellant and as accepted by the ITO.   37,33,257.00 Debts: Debts owned by the appellant as these are not borrowed capital . . Development rebate reserve 6,100.00 . Central sales-tax 67,375,00 . Outstanding wages 62,588.00 . Sundry creditors 12,11,254.00 13,47,317.00 . Capital employed: 23,85,940.00 On this basis the AAC w....

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.... the assessee firm, did not constitute borrowed moneys but constituted "debt owned by the assessee" and that such debts were required to be deducted in arriving at the capital employed in the industrial undertaking: Development rebate reserve 6,100.00 Central Sales-tax 67,375.00 Outstanding Wages 62,588.00 Sundry creditors 12,11,254.00 . 13,47.317.00 In the case of Century Enka Ltd.(1) from the aggregate of the amounts representing values of the assets in the amount of Rs. 6,90,26,628, the ITO had deducted current liabilities and provisions of Rs. 39,44,400 and loans in the amount of Rs. 2,86,56,984, thus arriving at the net amount of capital of Rs. 3,64,25,244. With reference to the loan capital of Rs. 2,86....