The assessee-company went into liquidation on August 8, 1960. The Income-tax Officer, while determining the taxable income of the assessee-company at Rs. 5,79,678 for the assessment year 1963..()4, was of the opinion that this amount would attract liability for super profits tax also and therefore aske,d the assessee company to file its return. The assessee-company submitted its return showing the chargeable profits as 'nil', contending that there could be no liability to super profits tax in respect of a company in liquidation since the formula laid down in the Second Schedule to the Super Profits Tax Act 1963 for ca1culation of the •standard deduction' was inapplicable on account of the fact that a company in liquidation could not be said to have paid-up share capital as on the first day of the previous year relevant to the assessment ye~ which was long subsequent to the winding up. The Jncorne .. Tax Officer how- ever overruled the aforesaid contention and worked out the chargeable profits at Rs. 2,04,740 after adopting a minimum amount of Rs. 50,000 mentioned in s.2 (9) of the Act as a "standard deduction". The said order was confirmed in appeat by the Appellate Assistant Commissioner. But, on further appeal by the assessee-company the Income-tax Appellate Tribunal while aJlowing the appeal held : (1) that in the hands of the liquidator there is only one integral fund which could not be split up into share capital, reserve profits and therefore s.27 of the Act was clearly attracted to the case ; .and (ii) that no assessment to super profits could be made on a company in liquidation since section 4 of the Act would not apply to the assessee company in liquidatioa as the standard deduction was incapable of ascertainment. The High Court, rejected the reference made at the instance of the Revenue.
