- (1.) At the instance of the Commissioner of Income-tax, Allahabad, the Income-tax Appellate Tribunal has referred the following question under Section 256(1) of the Income-tax Act, 1961 (briefly, "the Act"), for the opinion of this court ; "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the fixed deposit should be included in the computation of capital for making out the relief under Section 80J of the Act ?"
(2.) The reference relates to the assessment year 1974-75, the accounting period for which ended on March 31, 1974. The assessee is a State Government undertaking which was brought into existence for the development of the industries in the Eastern region of Uttar Pradesh. The assessee undertaking acquired fixed deposit receipts (F. D. R.) of the amount aggregating to Rs. 4,01,500 and claimed that the same was to be included for the purposes of computation of the capital employed in the undertaking. The Income-tax Officer while making the assessment refused to include the aforesaid amount of fixed deposit receipts with the following reasoning : "Less : Amount of F. D. Rs. not invested in industrial undertaking--Rs. 4,01,500."
(3.) For the above reasoning, the Income-tax Officer refused to include the amount of the F. D. Rs. in the computation of capital employed.;