1980 (4) TMI 191

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....be accorded to dividend equalisation reserve for the purposes of computing the capital base with reference to which the standard deduction is worked out. The dividend equalisation reserve was Rs. 1 lakh for all the three years and the ITO took the view that it is a provision to meet a specific liability at a future date and that it could not therefore be included in the capital base. This view was confirmed in first appeal. The question of dividend reserve had specifically come up before the Bombay High Court in CIT vs. Marrior (India) Ltd. (1) and decided in favour of the tax payer. In this case, dividends had actually been paid out of general reserve. Even, so, it was considered as a reserve because it was shown in the balance-sheet as a ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al reserve stood at Rs. 13,50,000 as on 31st March, 1967. There were further appropriations taken to the reserves subsequently and the figure for asst. yr. 1970-71 stood at Rs. 17,10,196. However, the ITO took the general reserves only at Rs. 13,50,000 for all the three years because of the pending disputes before the High Court and not all the appropriations were approved by the Board of Directors or the general body, since no meetings could be held after 31st March, 1967 and the finalisation of accounts for all the three years. The AAC who passed the order for asst. yr. 1970-71 took the view that the appeal on this point was raised by way of additional grounds and that such additional grounds were signed "by a person not duly authorised t....