In these appeals the High Court has answered against the assessee and in favour of the Revenue the following question referred to by the Income Tax Appellate Tribunal hereinafter referred as the Tribunal Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sums of Rs.
Whether, on the facts and in the circumstances of the case, the assessee is entitled to the deduction of Rs.
30,104 companytributed by it for the Contingencies Reserve for the assessment years 1969 70 an 1970 71 respectively?
In these appeals, which relate to assessment years 1969 70 and 1970 71, the High Court has answered against the assessee and in favour of the Revenue the following questions referred by the Tribunal Whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction of Rs.
The Income Tax Officer while making the assessment disallowed the said deductions and added the said amounts in the income of the assessee.
1 and 2 in favour of the Revenue and against the assessee on the basis of its earlier judgment in Velhre Electric Corporation Ltd. supra in respect of assessment year 1966 67.
In the assessment year 1970 71 there was appropriation of Rs.
18,735 transferred by it to the Development Reserve account and to the Tariffs and Dividend Control Reserve account respectively for the assessment year 1969 70 and Rs.
1,39,781 in respect of the amounts transferred by the assessee to the Contingencies Reserve and Development Reserve.
The assessee is a public limited companypany having a licence under the provisions of the Electricity Supply Act, 1948 hereinafter referred to as the Electricity Supply Act to distribute power in the Vellore and Ranipet areas.
As indicated earlier, the assessee is a licensee under the Electricity Supply Act for the purpose of distribution of power.
91,715 and Rs.
30,104 to the Contingencies Reserve and Rs.
98,676 to the Development Reserve and Rs.
89,324 transferred to the Development Reserve Account for the Assessment Years 1967 68 and 1968 69 respectively were number to be deducted in arriving at the taxable profits of the assessee company?
The Tribunal, on further appeal, allowed the claim of the assessee in respect of appropriation of sums to the Contingencies Reserve, but rejected the claim for deduction of the amounts appropriated to the Development Reserve and Tariffs and Dividend Control Reserve.
1997 Supp 1 SCR 586 The Judgment of the Court was delivered by C. AGRAWAL, J. These appeals filed by the assessee raise companymon questions for companysideration.
Such deposits were for short duration and were subsequently utilised for re payment of loans.
Civil Appeals Nos.
Is the assessee entitled to deduction under Section 80 I on the interest received on the amounts transferred to the Contingencies Reserve which were invested in Government securities?
Under the Sixth Schedule to the Electricity Supply Act the assessee was required to invest the sums appropriated in the Contingencies Reserve in securities authorised under the Indian Trusts Act, 1882, In respect of the assessment years 1967 68 and 1968 69 the assessee claimed deduction of the sums of Rs.
Indian Aluminium Co, Ltd. v. Commissioner of Income Tax, West Bengal II, 122 ITR 660 Calcutta Commissioner of Income Tax, Kerala I, Emakulam v. Cochin Refineries Ltd., 154 ITR 344 Kerala Commissioner of Income Tax, Tamil Nadu V v. Universal Radiators P. Ltd., 128 ITR 531 Madras Commissioner of Income Tax v. Kirloskar Oil Engines Ltd., 157 ITR 762 Bombay and English Electric Co. of India Ltd. v. Commissioner of Income Tax, 168 ITR 513 Madras .
In the assessment year 1969 70 there was appropriation of Rs, 55,703 to the Contingencies Reserve, Rs.
These appeals broadly involve following two questions Is the assessee entitled to claim deduction in respect of sums transferred to the Contingencies Reserve, Development Reserve and Tariffs and Dividend Control Reserve?
17,791 and Rs.
The said deposits were of amounts meant for the purpose of re payment Of loans which were so deposited as the loans were number due for re payment.
In view of Section 57 of the Electricity Supply Act read with Sixth Schedule to the said Act, the assessee was required to set apart a part of its profits for reserves known as Contingencies Reserve, Development Reserve, and Tariffs and Dividend Control Reserve.
On the basis of its earlier judgment in the Vellore Electricity Corporation Ltd, v. Union of India, 109 ITR 454, companycerning the assessment year 1966 67 in respect of the same assessee the High Court held that the assessee companyld number claim deduction in respect of Development Reserve and the question referred was answered against the assessee.
3333 3334 of 1981 relating to assessment years 1967 68 and 1968 69 have been filed against the judgment of the Madras High Court dated November 28, 1978 in T.C. No.
On further appeal, the Tribunal disallowed the claim of the assessee with regard to Development Reserve but held that the assessee was entitled to succeed in respect of the claim relating to Contingencies Reserve.
68,228 transferred by it to the Development Reserve account for the assessment year 1970 71?
The Tribunal referred to the High Court for its opinion the question above mentioned in respect of assessment years 1967 68 and 1968 69 regarding deducibility of the sums transferred to the Development Reserve.
The assessee also claimed deduction at the rate of 8 under Section 80 I of the Act on Rs.
116 of 1974 on the basis of certificate of fitness granted by the High Court under Section 261 of the Income Tax Act, 1961 hereinafter referred to as the Income Tax Act .
55,703 and Rs.
62,288 to the Development Reserve.
14,741 being the interest received by the assessee on Government Securities during the assessment years 1969 70 and 1970 71 in respect of amounts in the Contingencies Reserve which are required to be invested in such securities under the provisions of the Electricity Supply Act.
The said claim of the assessee was dismissed by the Income Tax Officer and the Appellate Assistant Commissioner.
2613 14 of 1984 have been filed against the judgment of the Madras High Court dated February 6, 1978 on the basis of certificate of fitness granted by the High Court under Section 261 of the Income Tax Act.
98,676 and Rs.
Whether, on the facts and in the circumstances of the case and in view of the provisions of the Electricity Supply Act, 1948, the assessee is entitled to relief under Section 80 I number only in respect of business income but also in respect of income derived by it from investments in securities?
On appeal, the Appellate Assistant Commissioner allowed certain deductions but did number companysider the question of excluding the amounts transferred to the Contingencies Reserve and Development Reserve.
In respect of the assessment years 1969 70 and 1970 71 the three questions mentioned above were referred by the Tribunal to the High Court for its opinion.
18,735 to the Tariffs and Dividend Control Reserve.
Civil Appeals Nos.
47,055 and Rs.
