Commissioner of Income Tax vs Asian Paints India Ltd.

Sugla, J.—In this departmental reference relating to the assessee''s assessment for the assessment years 1969-70,1970-71 and 1973-74, the Tribunal has referred to our Court the following four questions of law u/s 256(1) of the income tax Act, 1961 (''the Act''):

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no proportionate deduction from capital under rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 was called for with regard to the relief u/s 80G of the income tax Act, 1961 granted to the assessee in assessments, for assessment years 1969-70, 1970-71 and 1973-74?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the issue of bonus shares after the first day of the previous year out of the general reserve should be considered for the purposes of capital computation and the share capital should be increased proportionately for the purposes of capital computation under rule 1 of Second Schedule for assessment year 1970-71?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income tax Officer was wrong in reducing the general reserve by the amount of proposed dividend (which is to be paid out of general reserve) for the purposes of capital computation as provided in Companies (Profits) Surtax Act, 1964, for assessment year 1973-74?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income tax Officer was justified in reopening the assessment u/s 8(b) of the Companies (Profits) Surtax Act, 1964, by treating Instruction No. 623 of 28-9-1973 issued by the Central Board of Direct Taxes as ''Information'' within the meaning of the said section?"

The counsels are agreed that, in view of the Supreme Court''s judgment in the case of Second Income Tax Officer and Another Vs. Stumpp Schuele and Somappa (P) Ltd., , the first question requires to be answered in the affirmative and in favour of the assessee. The counsels are also agreed that, in view of the Supreme Court''s decision in the case of Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, , the second and the third questions are to be answered in the negative and in favour of the revenue.

There is also an agreement between the parties that, in view of the Supreme Court''s decision in the case of Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, , the fourth question (which was, incidentally, referred to this Court at the instance of the assessee) be answered in the negative and in favour of the assessee. The questions are so answered.

No order as to costs.