https://www.taxtmi.com/caselaws?id=69054 For surtax computation under the Second Schedule to the Companies (Profits) Surtax Act, only paid-up capital and properly appropriated reserves form the capital base. Recomputed profits arising because expenditure was treated as capital and depreciation allowed did not automatically become reserve; the excess remained undistributed profits carried to surplus in the balance-sheet. The Explanation to Rule 1 excluded such surplus from reserve, and Rule 1(iii) did not convert increased distributable profits into reserve. The assessee could not enlarge its capital base by adding that amount, so recomputation of surtax failed. en-us Fri, 10 Apr 1992 00:00:00 +0530 Mon, 04 Apr 2011 17:52:57 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=69054 For surtax computation under the Second Schedule to the Companies (Profits) Surtax Act, only paid-up capital and properly appropriated reserves form the capital base. Recomputed profits arising because expenditure was treated as capital and depreciation allowed did not automatically become reserve; the excess remained undistributed profits carried to surplus in the balance-sheet. The Explanation to Rule 1 excluded such surplus from reserve, and Rule 1(iii) did not convert increased distributable profits into reserve. The assessee could not enlarge its capital base by adding that amount, so recomputation of surtax failed. Case-Laws Income Tax Fri, 10 Apr 1992 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=69054