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TMI Blog1973 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer, while working out the capital employed for the purpose of section 84, added Rs. 1,15,807, being half of the profit of the relevant accounting year. Similar addition was made for the assessment year 1963-64 when an amount of Rs. 1,93,628, being half the share of the profit, was added for purposes of ascertaining the average amount of the capital. The capital thus worked out at Rs. 5,97,313 and Rs. 7,81,916 for the assessment years 1962-63 and 1963-64, respectively. It appears that subsequently the Income-tax Officer was of the view that the addition of these amounts in the computation of the capital was incorrect because, in his opinion, the average amount of capital had already been worked out with reference to all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of giving benefit to the assessee under section 84 as it then stood at the relevant time, the average amount of the capital has to be computed and that computation is to be made according to clause (1). Now, clause (5) of the said rule 19, which is relevant for the purposes of determination of the question, provides as under: " (5) For the purpose of ascertaining the average amount of capital employed in a business during any computation period, the profits or losses made in that period shall, except so far as the contrary is shown, be deemed-- (a) to have accrued, at an even rate throughout the said period; and (b) to have resulted, as they accrued, in a corresponding increase or decrease as the case may be, in the capital employed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk that it can be suggested for a moment that necessarily there would not be a long drawn process of reasoning or another facet of the question. The point is, whether in working out the average amount of capital the deeming fiction of providing for the profit is really debatable or not. In that view of the matter, therefore, it cannot be said, as has been taken for granted by the Income-tax Officer, that this can be an error apparent on the record and merely because in the assets the relevant year's profit would necessarily be reflected, the deduction given in clause (5) of rule 19 should be withdrawn. In that state of affairs the Tribunal was perfectly justified in allowing the appeals. We, therefore, answer the question that it was not c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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