https://www.taxtmi.com/caselaws?id=36273 Rule 3 of the Second Schedule to the Companies (Profits) Surtax Act permits an adjustment only where capital computed under rule 1 actually increases during the previous year. A bonus issue funded by reserves already included in the opening capital computation does not create a fresh increase in capital for this purpose, because it merely reclassifies existing reserves rather than enlarging the capital base. The court rejected the argument that the absence of an express reference to reserves in rule 3 justified a further step-up in capital computation. An assessee therefore cannot claim additional proportionate relief on account of such a bonus issue. en-us Wed, 25 Feb 1981 00:00:00 +0530 Sat, 20 Mar 2010 13:33:30 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=36273 Rule 3 of the Second Schedule to the Companies (Profits) Surtax Act permits an adjustment only where capital computed under rule 1 actually increases during the previous year. A bonus issue funded by reserves already included in the opening capital computation does not create a fresh increase in capital for this purpose, because it merely reclassifies existing reserves rather than enlarging the capital base. The court rejected the argument that the absence of an express reference to reserves in rule 3 justified a further step-up in capital computation. An assessee therefore cannot claim additional proportionate relief on account of such a bonus issue. Case-Laws Income Tax Wed, 25 Feb 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=36273