Including Dividend Reserve in Capital Computation for Taxation

The Bombay High Court held that the dividend reserve related to preference shares should be included in the capital computation base for taxation purposes, aligning with the Supreme Court precedent in Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559. The ruling favored the Revenue, and no costs were awarded.

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The judgment of the Bombay High Court in 1988 (12) TMI 96 raised a question regarding the inclusion of dividend reserve pertaining to preference shares in capital computation base. The court ruled in favor of the Revenue, following the Supreme Court decision in Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559. No costs were awarded.

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