Capitalisation of reserves does not increase company capital for surtax when paid up capital is merely converted from reserves. Conversion of general reserve into bonus issue paid up capital does not increase the company's capital for surtax purposes because the Second Schedule treats paid up capital and the general reserve as components of capital on the first day of the relevant previous year; a transfer between those components is a compensating readjustment leaving total capital unchanged, and therefore the addition provided by Rule 3, which applies only where capital increases during the previous year, does not apply.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Capitalisation of reserves does not increase company capital for surtax when paid up capital is merely converted from reserves.
Conversion of general reserve into bonus issue paid up capital does not increase the company's capital for surtax purposes because the Second Schedule treats paid up capital and the general reserve as components of capital on the first day of the relevant previous year; a transfer between those components is a compensating readjustment leaving total capital unchanged, and therefore the addition provided by Rule 3, which applies only where capital increases during the previous year, does not apply.
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