KIRLOSKAR ASEA LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Bangalore Bench (hereinafter referred to as "the Tribunal"), has referred to this court under s. 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the following two questions of law :

(2.) THE first of the aforesaid questions had also been referred to this court in I. T. R. Cs. Nos. 106 and 107 of 1975 (Kirloskar Asea Ltd. v. CIT - since reported in [1979] 117 ITR 717) in which that question has been answered in favour of the assessee by another Division Bench of this court (of which one of us was a member). For the reasons stated in those two cases, we answer the first question in the present reference also in favour of the assessee.

(3.) SUB-rule (5) of that rule provided, inter alia, that for the purpose of ascertaining the average amount of capital employed in an industrial undertaking during any computation period, the profits or losses made in the period shall, except so far as the contrary is shown, be deemed to have accrued at an even rate throughout the said period and to have resulted, as they accrued, in corresponding increase or decrease, as the case may be, in the capital employed in the undertaking.