Retained profits in surtax capital base were held includible, and the issue was rightly treated as debatable rather than an apparent mistake.

Retained profits were held includible in the capital base for surtax computation, and the lower authorities were found wrong in excluding them under section 13 of the Companies (Profits) Surtax Act, 1964. The question was also correctly treated as debatable rather than a mistake apparent from the record for the purpose of section 256(2) of the Income-tax Act, 1961. The Calcutta High Court agreed with the Tribunal's reasoning and refused the Revenue's request for relief.

---

---

Issues: Whether retained profits were includible in the capital base for surtax purposes and whether the question could be treated as a mistake apparent from the record for the purpose of section 256(2) of the Income-tax Act, 1961.

Analysis: The Tribunal had held that the includibility of retained profit was a debatable question and therefore could not amount to an apparent mistake. It also held on merits that the lower authorities were wrong in excluding the amount from the computation of capital base under section 13 of the Companies (Profits) Surtax Act, 1964. The Court agreed with that reasoning and saw no reason to interfere.

Conclusion: The question was rightly treated as debatable and the retained profit was correctly included in the capital base; the relief sought by the Revenue was refused.

---