TaxTMI 
TaxTMI 
1979 (4) TMI 44
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....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 amount of Rs. 2,23,955 3. The ITO did not accept the computation as furni....
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....al 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 worked out the deduction in terms of s. 80J(1) at 6 percent of the capital of Rs. 23,85,940m i.e. in the amount of Rs. 1,43,156. 5. We have heard the learned representative for the assessee-firm and the learned Departmental Representative. It has already been held by the Hon'ble Calcutta High Court....
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....,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. 2,86,56,984 the Hon'ble Calcutta High Court held that r. 19A(3), in so far as it directs exclusion of borrowed capital except from approved sources, is ultra vires, being beyond the power of the rule-making authority. The question whether current liabilities and provisions should be treated as part of the capital employed in the i....