https://www.taxtmi.com/caselaws?id=23069 Rule 3 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 permits an upward adjustment in capital only when the capital computed under the Schedule is actually increased during the previous year; issue of fully paid bonus shares out of general reserves does not, by itself, create such an increase because the higher paid-up share capital is offset by a corresponding reduction in reserves. The capital base therefore is not enhanced to the extent of the bonus shares. Exempt income under Chapter VI-A of the Income-tax Act, 1961 must be reduced while computing the surtax capital base, and that position was affirmed on the basis of binding authority. en-us Fri, 01 Dec 1989 00:00:00 +0530 Wed, 16 Dec 2009 15:04:30 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=23069 Rule 3 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 permits an upward adjustment in capital only when the capital computed under the Schedule is actually increased during the previous year; issue of fully paid bonus shares out of general reserves does not, by itself, create such an increase because the higher paid-up share capital is offset by a corresponding reduction in reserves. The capital base therefore is not enhanced to the extent of the bonus shares. Exempt income under Chapter VI-A of the Income-tax Act, 1961 must be reduced while computing the surtax capital base, and that position was affirmed on the basis of binding authority. Case-Laws Income Tax Fri, 01 Dec 1989 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=23069