TMI Blog1975 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... on profits not exceeding 6 per cent. per annum on the capital employed in the undertaking. For that purpose, the capital employed in an industrial undertaking has to be computed under rule 19 of the Income-tax Rules, 1962, which is in the following terms : " 19. Computation of capital employed in an industrial undertaking or a hotel.---(1) For the purposes of section 84, the capital employed in an undertaking or a hotel to which the said section applies shall be taken to be--- (a) in the case of assets acquired by purchase and entitled to depreciation--- (i) if they have been acquired before the computation period, their written down value on the commencing date of the said period ; (ii) if they have been acquired on or after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year should be taken into account for the computation of the capital employed in the undertaking, and the assessment orders pertaining to the assessment years in question were passed on that footing. The assessee appealed to the Appellate Assistant Commissioner by two separate appeals, one in respect of each assessment year. As far as the appeal relating to assessment year 62-63 was concerned, the Appellate Assistant Commissioner who heard it agreed with the view of the Income-tax Officer. As far as the appeal relating to assessment year 1963-64 was concerned, the Appellate Assistant Commissioner who heard it, however, took the contrary view, holding that the proviso which follows clause (d) applies only to that clause and not to clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the asset referred to in clause (c), viz., the debt due to the assessee, which may in the course of the same year vary from time to time, is such that it is incapable of averaging the same. It was sought to be contended on behalf of the revenue that, after all, a debt due to the company would be in respect of some amount or some goods or property which has gone out of the assets of the company, and if, therefore, the process of averaging is applied in regard to the assets and profits of an assessee, it would automatically result in the averaging of the debts due to the assessee which would be included therein. This argument, though on first impression somewhat attractive, cannot be accepted, for it must lead to the conclusion that cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to indicate that the amount which is actually named has to be taken into account in computing the capital for the purposes of section 84 of the Act. A reference to the Shorter Oxford Dictionary as well as Webster's Dictionary shows that the word " nominal " means what is named in contradistinction to what is real. Giving to the word " nominal " that connotation, in my opinion, it is clear that it excludes the process of averaging which is to be resorted to in the case of clauses (a), (b) and (d) for the purpose of arriving at what was thought to be the real value of those assets. The next reason for not accepting the submission of the revenue is that the word " value " which is used in the proviso in question does not occur in clause (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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