COMMISSIONER OF INCOME TAX Vs. GUJARAT MINERAL DEVELOPMENT CORPORATION

JUDGEMENT

(1.) IN these two references which arise out of the same order of the Tribunal, two questions have been referred to us at the instance of the CIT and three questions have been referred to us at the instance of the assessee. After the Tribunal delivered its order in appeal, two separate applications for reference under S. 256(1) were filed, one by the Revenue and the other by the assessee and the relevant questions of law have been referred for our opinion by the Tribunal. Since all these questions arise out of the same order of the Tribunal, these two references are being disposed of by this common judgment. The questions referred to us at the instance of the Revenue are :

(2.) THE three questions which are referred to us at the instance of the assessee are as follows :

(3.) AGAIN , when the matter was taken in further appeal before the Tribunal, the following figures were pointed out to the Tribunal, namely, that the opening balance in the fixed deposit account was Rs. 20.50 lakhs so far as the asst. year 1967 68 was concerned and the closing balance was Rs. 21 lakhs. For the asst. year 1968 69, the opening balance was Rs. 21 lakhs and the closing balance was Rs. 27 lakhs and for the asst. year 1969 70, the opening balance was Rs. 27 lakhs and the closing balance was Rs. 21.50 lakhs. The assessee pointed out that the assessee had received the sum of Rs. 44 lakhs from the Govt. of Gujarat on December 18, 1967. Since a portion of this amount was not immediately required for the business of the assessee, the assessee, as a prudent businessman, invested the surplus funds on short term deposits with various banks. The majority of the fixed deposits were placed on short term fixed deposit for periods ranging from 46 to 91 days for the asst. year 1967 68, for periods ranging from 46 to 180 days for the asst. year 1968 69 and for the period of 46 days for the asst. year 1969 70. The amounts in question, all the same, formed part of the assets of the assessee for the purposes of its business and, therefore, the exclusion thereof in computing capital for giving relief under S. 84 or deduction under s. 80J by the authorities was not in order.