C.I.T. GUJARAT vs ELECON ENGINEERING CO. LTD.

The Supreme Court upheld the High Court's decision regarding the computation of exemption under Section 84 of the Income Tax Act, 1961, which was not disputed but rather the method of calculation was in question. The Court confirmed that the average capital should include profits as per Rule 19(5) and that the Revenue's re-assessment, which excluded half the profit from the new project, was incorrect. The final determination of exemption was set at Rs.2,72,372, representing 6% of the capital employed in the new industrial undertaking.