- (1.) These appeals filed by the assessee raise common questions for consideration. Civil Nos. 3333-3334 of 1981 relating to Assessment Years 1967-68 and 1968-69 have been filed against the judgment of the Madras High court dated 28/11/1978 in TC No. 116 of 1974 on the basis of certificate of fitness granted by the High court under Section 261 of the Income Tax Act, 1961 (hereinafter referred to as "the Income Tax Act"). In these appeals the High court has answered against the assessee and in favour of the Revenue the following question referred to by the Income Tax Appellate tribunal (hereinafter referred to as "the tribunal") : "Whether on the facts and in the circumstances of the case, the Appellate tribunal was right in holding that the sums of Rs. 47,055. 00 and Rs. 89,324. 00 transferred to the Development Reserve Account for the Assessment Years 1967-68 and 1968-69 respectively were not to be deducted in arriving at the taxable profits of the assessee-company -
(2.) Civil Nos. 2613-14 of 1984 have been filed against the judgment of the Madras High court dated 6/2/1978 on the basis of certificate of fitness granted by the High court under Section 261 of the Income Tax Act. In these appeals, which relate to Assessment Years 1969-70 and 1970-71, the High court has answered against the assessee and in favour of the Revenue the following questions referred by the tribunal: "(1 Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction of Rs. 55,703. 00 and Rs. 30. 104. 00 contributed by it for the "contingencies Reserve" for the Assessment Years 1969-70 and 1970-71 respectively (2 Whether, on the facts and in the circumstances of the case, the assessee is entitled to the deduction of Rs. 98,676. 00 and Rs. 18,735. 00 transferred by it to the 'development Reserve' Account and to the 'tariffs and Dividend Control Reserve' Account respectively for the Assessment Year 1969-70 and Rs. 68,288. 00 transferred by it to the 'development Reserve' Account for the Assessment Year 1970-71 (3 Whether, on the facts and in the circumstances of the case and in view of the provisions of the Electricity (Supply) Act, 1948, the assessee is entitled to relief under Section 80-1 not only in respect of business 709 income but also in respect of income derived by it from investments in securities -
(3.) The assessee is a public limited company having a licence under the provisions of the Electricity (Supply) Act, 1948 [hereinafter referred to as "the Electricity (Supply) Act"] to distribute power in the Vellore and Ranipet areas. In view of Section 57 of the Electricity (Supply) Act read with the Sixth Schedule to the said Act, the assessee was required to set apart a part of its profits for reserves known as "contingencies Reserve", "development Reserve", and "tariffs and Dividend Control Reserve". Under the Sixth Schedule to the Electricity (Supply) Act the assessee was required to invest the sums appropriated in the "contingencies Reserve" in securities authorised under the Indian Trusts Act, 1882. In respect of the Assessment Years 1967-68 and 1968-69 the assessee claimed deduction of the sums of Rs. 91,715. 00 and Rs. 1,39,781. 00 in respect of the amounts transferred by the assessee to the Contingencies Reserve and Development Reserve. The Income Tax Officer while making the assessment disallowed the said deductions and added the said amounts in the income of the assessee. On appeal, the Appellate Assistant Commissioner allowed certain deductions but did not consider the question of excluding the amounts transferred to the Contingencies Reserve and Development Reserve. On further appeal, the tribunal disallowed the claim of the assessee with regard to Development Reserve but held that the assessee was entitled to succeed in respect of the claim relating to Contingencies Reserve. The tribunal referred to the High court for its opinion the question above mentioned in respect of Assessment Years 1967-68 and 1968-69 regarding deductibility of the sums transferred to the Development Reserve. On the basis of its earlier judgment in the Vellore Electric Corpn. Ltd. v. commissioner OF INCOME TAX concerning the Assessment Year 1966- 67 in respect of the same assessee the High court held that the assessee could not claim deduction in respect of Development Reserve and the question referred was answered against the assessee.;