Per R.V. Easwar, Judicial Member - The assessee is a public limited company engaged in the manufacture and sale of paints. It follows the mercantile system of accounting. A return of income was filed for the assessment year 1984-85 relevant to the accounting year ended 31-12-1983 declaring a total income of Rs. 1,93,21,870. In the course of the assessment proceedings the assessee filed a revised computation of its total income which is as under:

"Berger Paints India Limited.

(Formerly British Paints India Ltd.)

Statement showing amended total income for the assessment year 1984- 85 corresponding to our accounting year ended on 31-12-1983.

A covering letter dated 4-11-1986 was also filed along with the revised computation. The covering letter is as under:

Dear Sir,

Re:Income-tax Assessment for the assessment year 1984-85 corresponding to our accounting year ended on 31-12-1983.

On an examination of the return filed by us on 31-8-1984 we find that in making the computation of total income we omitted to take into account certain adjustments in terms of section 43B of the Income-tax Act, 1961 as a result of which a sum of Rs. 98,25,833 was wrongly included in the total income and the correct total Income should have been shown in the return at Rs. 94,96,040 instead of Rs. 1,93,21,870. During the relevant accounting year we had actually paid a sum of Rs. 5,85,87,181 on account of excise duty and customs duty. This amount does not include any excise and customs duty payable in earlier years and allowed as a deduction in any earlier assessment. But excise and customs duty actually paid has not been wholly charged in the profit & loss accounts as a part of it has been carried over to the next year. Amount actually allowable under the provisions of section 43B has been shown in a separate computation enclosed herewith.

We would request you to kindly treat the return already filed by us as amended to this extent and to proceed to make the assessment on the basis of this revised computation.

Thanking you,

Yours faithfully,

Sd/- H.P. Bhagat, Director BERGER PAINTS INDIA LIMITED

encl. As above."

2. It was explained before the ITO that the assessee had actually incurred a sum of Rs. 5,85.87, 181 towards the excise and customs duties, that out of the aforesaid amount a sum of Rs. 98,25,833 was included in the value of the closing stock of finished goods, raw materials and work-in-progress, that because of this the claim of excise and customs duties stood reduced to Rs. 4,87,61,348 (Rs. 5,85,87,181 - Rs. 98,25,833) and, therefore, the assessee claimed the amount of Rs. 98,25,833 as deduction by filing a revised computation. In other words, the case of the assessee was that by virtue of the credit of Rs. 98,25,833 as part of the value of the closing stock the effective debit of customs and excis