Law:

Section:

(i) Section 9 of the Super Profits Tax Act, 1963 – Profits escaping assessment – Assessment year 1963-64 – ITO reopened assessment under section 9(b) on ground that certain reserve created for specific purposes and excess of development reserve were considered for purpose of capital computation for determining standard deduction under rule 1 of Second Schedule to Act – ITO had already taken into consideration and applied his mind to said aspect – Whether ITO proceeded only on second thoughts on same material and there was thus mere change of opinion and there was no new in formation as required under section 9(b) – Held, yes – Whether, therefore, initiation of reassessment proceedings under section 9(b) was not warranted – Held, yes (ii) Second Schedule to the Super Profits Tax Act, 1963 – Capital – Computation of – Assessment years 1965-66 and 1966-67 – Whether rehabilitation reserve, reserve for doubtful debts and gratuity reserve created by assessee were includible in computing capital base for determining statutory deduction – Held, yes FACTS-I The assessment was sought to be re-opened under section 9(b ), on the ground that certain reserve created for specific purposes and the excess of the development reserve were considered for the purpose of capital computation for determining the standard deduction under rule 1 of the Second Schedule. The assessee's contention that there was no information to warrant the reopening of the assessment under section 9(b) as there was a case of mere change of opinion was accepted by the Appellate Assistant Commissioner and the Tribunal. On reference : FACTS-II The Tribunal had that rehabilitation reserve, reserve for doubtful debts and gratuity reserve created by the assessee were includible in computing the capital base for determining the statutory deduction. On reference : HELD-I In the instant case, the very original order of the Income-tax Officer made it in terms clear that this was a case of a mere change of opinion because he was only proceeding on second thoughts on the same material. The Income-tax Officer in his order in terms stated that the action under section 9(b) was initiated as it was found that chargeable…

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