Capital computation under surtax law requires reference on adjustment of secured loans and tax provisions.

Interpretation of rule 2 of the Second Schedule to the Companies (Profits) Surtax Act governed capital computation for surtax purposes, specifically the adjustment of secured bank loans and provision for taxation. The court treated the Revenue's proposed question as a question of law fit for reference, and the Tribunal's reliance on an earlier year's order, which was not produced, did not remove that obligation. The Tribunal was therefore required to refer the common question of law to the High Court.

---

---

Issues: Whether the Appellate Tribunal was right in refusing to refer the common question of law relating to adjustment of secured bank loans and provision for taxation while computing capital under rule 2 of the Second Schedule to the Companies (Profits) Surtax Act.

Analysis: The dispute turned on the interpretation of rule 2 of the Second Schedule to the Companies (Profits) Surtax Act in the context of capital computation for surtax purposes. The Court was satisfied that the question formulated by the Revenue was a question of law requiring reference. The fact that the Tribunal had relied on an earlier year's order, which was not produced before the Court, did not alter the need for a reference on the legal issue raised.

Conclusion: The Tribunal was required to refer the common question of law to the High Court.

---