Judgement

RANGANATH MISRA , J. :- This appeal by certificate has been carried by the Revenue challenging the decision rendered by the Gujarat High Court reported in 104 ITR 510 on a reference under the Income-tax Act, 1961.

2. Assessee is a Public Limited Company and the relevant assessment year is 1964-65. This was the second year of the assessees new project at Vidyanagar going into production. On 19-3-1965, the Income-tax Officer computed the assessment under S. 143(3) of the Act after determining the rebate admissible under Ss. 84 and 101 of the Act at Rs. 2,72,372/-. He reopened the assessment under S. 147(b) of the Act and by his reassessment order dated 29-11-1966 recomputed the rebate at Rs., 2,51,222/-. The appeal by the assessee to the Appellate Assistant Commissioner was dismissed. The Appellate Tribunal on further appeal by the assessee came to hold : -

"There is considerable force in the arguments urged by Sri Talati. In view of the phraseology used in the rules we are inclined to accept Sri Talatis plea that to the figure of capital as worked out under R. 19(l) is to be added the average profit as worked out under sub-r. (5) of R. 19. Accordingly, the average capital has