Appropriation to reserves relate back to the first day, becoming reserves for capital computation under surtax law. Appropriations to reserves by directors out of profits of a particular previous year relate back to the first day of the immediately following previous year; once proposed additions are approved in the annual general meeting they become part of the company's reserves with effect from that first day and must be included as reserves when computing the company's capital under the Second Schedule for the Surtax Act.