Excess depreciation adjustment excluded from capital for surtax deduction, with earlier precedent in the assessee's own case followed.

An amount adjusted for excess depreciation charged in earlier years cannot be treated as part of capital for computing the statutory deduction under the Companies (Profits) Surtax Act, 1964. The Calcutta HC followed its earlier Division Bench ruling in the assessee's own case, found no reason to depart from it, and held that a later decision cited by the assessee did not displace that precedent. The excess depreciation adjustment was therefore excluded from capital for surtax computation, and the issue was decided against the assessee.

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Issues: Whether the amount adjusted towards excess depreciation charged in earlier years could be treated as part of the capital for determining the statutory deduction under section 2(8) of the Companies (Profits) Surtax Act, 1964.

Analysis: The question had already been answered by an earlier Division Bench in the assessee's own case for a previous assessment year, and the Tribunal in the present matter had merely followed that decision without adding independent reasoning. The Court found no reason to depart from the earlier view, and the subsequent decision referred to by the assessee was held not to undermine the earlier ruling in the assessee's own case.

Conclusion: The amount representing excess depreciation adjustment could not be treated as part of the capital for the purpose of statutory deduction, and the question was answered in the affirmative and against the assessee.

Ratio Decidendi: An amount set apart in excess of what is actually required for depreciation does not become part of the capital for statutory deduction where it is properly treated as an item outside capital for surtax computation.

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