U.T Shah, J.:— Under section 256(1) of the Income-tax Act, 1961, as applied to surtax by section 18 of the Companies (Profits) Surtax Act, 1964, the Income-tax Appellate Tribunal has referred the following question at the instance of the Revenue:
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Income-tax Officer could not invoke rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the purpose of reducing the capital base proportionately having regard to the deduction the assessee-company had obtained in terms of Chapter VI-A of the Income-tax Act, 1961, in the computation of its total income?”
2. Learned counsel for the Revenue fairly submitted that the issue involved in the aforesaid question is covered in favour the assessee by the decision of the Supreme Court in Second ITO v. Stumpp Schuele and Somappa P. Ltd., [1991] 187 ITR 108.
3. In this view of the matter, he further submitted that the preparation of the paperbook may be dispensed with and reference may be disposed of accordingly.
4. Respectfully following the aforesaid decision, we answer the question in the affirmative and in favour of the assessee.
5. No order as to costs.