Proposed dividend reserve excluded from "other reserves" under super profits tax computation, following Supreme Court interpretation.

A proposed dividend reserve does not qualify as "other reserves" for the statutory computation under rule 1 of the Second Schedule to the Super Profits Tax Act, 1963. Applying the Supreme Court's interpretation of that expression, the Bombay HC answered the issue in the negative and treated the proposed dividend reserve as outside the reserve base used for the computation, thereby favouring the Revenue.

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Issues: Whether the proposed dividend reserve constituted "other reserves" within the meaning of rule 1 of the Second Schedule to the Super Profits Tax Act, 1963.

Analysis: The question was answered in the light of the Supreme Court's decision holding that a proposed dividend reserve does not fall within the expression "other reserves" for the purpose of the statutory computation.

Conclusion: The issue was answered in the negative, in favour of the Revenue, and the proposed dividend reserve was held not to constitute "other reserves" under rule 1 of the Second Schedule to the Super Profits Tax Act, 1963.

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