TMI Blog1978 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... in the rupee value of the machinery calculated with reference to the devaluation of the rupee was part of the actual cost of the plant and machinery for purposes of allowance of depreciation and development rebate ? (2) Whether the Tribunal was right in holding that for the purpose of computing the quantum of deficiency for assessment year 1967-68 liable to be carried forward and set off in assessment year 1968-69 under section 80J, the computation of capital has to be made under rule 19A and not under rule 19 of the Income-tax Rules, 1962 ? " The first of the aforesaid questions had also been referred to this court in I.T.R.Cs. Nos. 106 and 107 of 1975 (Kirloskar Asea Ltd. v. CIT-since reported in [1979] 117 ITR 717) in which that ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g date of the said period ; (ii) if they have been acquired on or after the commencing date of the computation period, their average cost during the said period ........ " Sub-rule (5) of that rule provided, inter alia, that for the purpose of ascertaining the average amount of capital employed in an industrial undertaking during any computation period, the profits or losses made in that period shall, except so far as the contrary is shown, be deemed to have accrued at an even rate throughout the said period and to have resulted, as they accrued, in corresponding increase or decrease, as the case may be, in the capital employed in the undertaking. In effect, what r. 19 provided was that if there was an addition to the capital of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, such unabsorbed tax concession (which is called the deficiency) shall be carried forward to the following years and shall be set off against the profits and gains of such years subject to a limit of seven years. The earliest year from which such deficiency can be carried forward is the previous year relevant to the assessment year commencing from April 1, 1967. The main difference between r. 19 and r. 19A, for the purpose of computation of the capital, is that the average capital during the accounting year is taken under the former rule, while the capital as on the first day of the relevant accounting year is taken under the latter rule. In other words, additions to the capital of the undertaking after the first day of the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide for taking into account such additions. The assessee's contention that the tax concession determined for the assessment year 1967-68 under s. 84 should not be reopened and should be carried forward without modification for the assessment year 1968-69 was accepted by the AAC who reversed this part of the order of the ITO and computed the deficiency as claimed by the assessee. But the Tribunal reversed the decision of the AAC and restored the decision of the ITO on this point. Sri Sarangan contended that, as the tax concession for the assessment year 1967-68 had already been determined by the ITO in accordance with the law that was applicable for that assessment year, it was not open to the ITO to reopen and to redetermine such tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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