Commissioner of Income Tax vs Andhra Prabha (P.) Ltd.

K.A. Thanikkachalam, J.—In compliance with the direction given by this court in T. C. P. No. (99 of 1979, dated October 13, 1979, the

Tribunal referred the following question, for the opinion of this court, u/s 18 of the Companies (Profits) Surtax Act, 1964, and section 256(2) of

the Income Tax Act, 1961 :

Whether, on the facts and in the circumstances of the case, no portion of the capital is to be deducted under rule 4 of the Second Schedule in

respect of the deduction granted to the assessee u/s 80M of the Income Tax Act, 1961, in computing the capital employed ?

The point for consideration is, whether a portion of the capital, can be deducted under rule 4 of the Second Schedule in respect of the deduction

granted to the assessee u/s 80M of the Income Tax Act, 1961, in compiling the capital employed. In Second Income Tax Officer and Another Vs.

Stumpp Schuele and Somappa (P) Ltd., , the Supreme Court held that no portion of the capital is to be deducted under rule 4 of the Second

Schedule in respect of the deduction granted u/s 80M of the Income Tax Act, 1961, in computing the capital employed. In as much as the order

passed by the Tribunal is in accordance with the above cited decision of the Supreme Court, we answer the question referred to us in the

affirmative and against the Department. No costs.