https://www.taxtmi.com/caselaws?id=24030 Under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, only reserves that were allowed as a deduction in computing income under the Income-tax Act can be reduced from capital base. The exchange gain credited to general reserve on foreign-currency devaluation had not been allowed as a deduction in the assessee's income-tax assessment. It arose from reduced rupee liability on repayment of a dollar loan used to acquire plant and machinery, so it was treated as a capital-account gain rather than a trading receipt or a capital gain from transfer of a capital asset. The accounting treatment did not change its character, and it could not be excluded from capital for surtax computation. en-us Mon, 06 Mar 1989 00:00:00 +0530 Sat, 16 Jan 2010 11:03:15 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=24030 Under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, only reserves that were allowed as a deduction in computing income under the Income-tax Act can be reduced from capital base. The exchange gain credited to general reserve on foreign-currency devaluation had not been allowed as a deduction in the assessee's income-tax assessment. It arose from reduced rupee liability on repayment of a dollar loan used to acquire plant and machinery, so it was treated as a capital-account gain rather than a trading receipt or a capital gain from transfer of a capital asset. The accounting treatment did not change its character, and it could not be excluded from capital for surtax computation. Case-Laws Income Tax Mon, 06 Mar 1989 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=24030