Ranganath Misra , J. - (1.) This appeal by certificate has been carried by the Revenue challenging the decision rendered by the Gujarat High Court reported in 104 ITR 510 on a reference under the Income-tax Act, 1961.
(2.) Assessee is a Public Limited Company and the relevant assessment year is 1964-65. This was the second year of the assessee's new project at Vidyanagar going into production. On 19-3-1965, the Income-tax Officer computed the assessment under S. 143(3) of the Act after determining the rebate admissible under Ss. 84 and 101 of the Act at Rs. 2,72,372/-. He reopened the assessment under S. 147(b) of the Act and by his reassessment order dated 29-11-1966 recomputed the rebate at Rs., 2,51,222/-. The appeal by the assessee to the Appellate Assistant Commissioner was dismissed. The Appellate Tribunal on further appeal by the assessee came to hold:- "There is considerable force in the arguments urged by Sri Talati. In view of the phraseology used in the rules we are inclined to accept Sri Talati's plea that to the figure of capital as worked out under R. 19(l) is to be added the average profit as worked out under sub-r. (5) of R. 19. Accordingly, the average capital has to be taken at Rs. 45,39,537/- and not at Rs. 41,87,034/-. The assessee's contention must, therefore, be upheld." . At the instance of the Revenue, the Tribunal referred the following question for the opinion of the High Court:- "Whether on the facts and in the circumstances of the case, the figure arrived at by computation under R. 19(5) was to be added to the figure arrived at by computation under R. 19(l) for determining the average capital employed in the assessee's undertaking -
(3.) The High Court noticed the feature that there was dearth of judicial decisions on the point at issue dealt with the relevant provisions at length and came to agree with the conclusion reached by the Appellate Tribunal.;