TMI Blog1984 (5) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed by the assessee against the order dated 28-11-1981 of the Commissioner (Appeals), by which he confirmed the order under section 104 of the Income-tax Act, 1961 ('the Act'), passed by the ITO demanding additional tax of Rs. 5,658 from the assessee. 2. The assessee is a limited company in which the public are not substantially interested. The ITO found that the distributable income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry at the prevailing market price. If this is done, then there will be no amount left which could be distributed as dividend. Shri Roy Alphonso, the learned representative for the department, on the other hand, supported the order of the Commissioner (Appeals). 5. We have considered the contentions of both the parties as well as the facts on record. The assessee is a wholly owned subsidiary of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount provided should be adequate to replace the asset when it becomes unserviceable. That replacement cost would naturally be the prevalent market price in the year in which the assets become unworkable. The price paid by the previous owner several years back would no longer be sufficient to replace the asset because of the inflationary trend of our economy which is a well-known fact. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee should have been exempted from the operation of section 104 on the ground of smallness of commercial profits also. We find support for the above conclusion of ours in the decision of the Supreme Court in the case of CIT v. Gangadhar Banerjee Co. (P.) Ltd. [1965] 57 ITR 176. 6. For the above reasons, we cancel the order under section 104 passed by the ITO and allow the assessee's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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