COMMISSIONER OF INCOME TAX CENTRAL Vs. SHALIMAR TAR PRODUCTS 1935 LTD

JUDGEMENT

(1.) This reference under Section 256(1) of the I.T. Act, 1961, at the instance of the Commissioner of Income-tax, Central, Calcutta, relates to the assessment year 1965-66 and the question referred to us is as follows :

(2.) The Surtax Officer treated the following two amounts as reserves and computed the capital of the assessee-company under the Companies (Profits) Surtax Act, 1964: <FRM>JUDGEMENT_86_ITR127_1981Html1.htm</FRM>

(3.) The Commissioner was of the view that the Surtax Officer had wrongly included the above two items for computing the capital under the C. (P.) S.T. Act, 1964. As the Commissioner was of the view that the order of the Surtax Officer was erroneous in law and prejudicial to the interests of the revenue, he sought to revise the same under Section 16 of the C. (P.) S.T. Act, 1964. So, he issued a notice to the assessee to show cause why the order of the Surtax Officer should not be revised. The assessee submitted its explanation before the Commissioner. The Commissioner was of the view that the amounts in dispute represented amounts set apart for meeting the liabilities of the assessee-company. Thus, the Commissioner held that the Surtax Officer erred in treating the above two amounts as reserves. Hence, he set aside the order of the Surtax Officer and directed him to make a fresh assessment.