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Issues: (i) Whether reserve for bonus and reserve for doubtful debts were includible in the computation of capital employed for statutory deduction under the Second Schedule to the Companies (Profits) Surtax Act, 1964. (ii) Whether deductions under sections 80G and 80M of the Income-tax Act, 1961, could be treated as sums not includible in total income for deduction under rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964.
Issue (i): Whether reserve for bonus and reserve for doubtful debts were includible in the computation of capital employed for statutory deduction under the Second Schedule to the Companies (Profits) Surtax Act, 1964.
Analysis: The answer was governed by the earlier decision of the same Court on similar questions concerning the same assessee. On that basis, the amounts in question were treated as falling within the computation of capital employed for purposes of statutory deduction under the Second Schedule.
Conclusion: The issue was answered in the negative, in favour of the assessee and against the Revenue.
Issue (ii): Whether deductions under sections 80G and 80M of the Income-tax Act, 1961, could be treated as sums not includible in total income for deduction under rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964.
Analysis: The Court followed its earlier ruling involving the same assessee and held that deductions allowed under Chapter VI-A did not constitute sums not includible in total income for the purpose of rule 4 of the Second Schedule.
Conclusion: The issue was answered in the negative, in favour of the assessee and against the Revenue.
Final Conclusion: Both referred questions were decided against the Revenue and the reference was disposed of in accordance with the earlier binding decision on identical issues.
Ratio Decidendi: Where an earlier decision has already determined identical questions on the same statutory scheme, the same conclusion governs the subsequent reference on those questions.
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