Whether proposed additions to reserves as on first day of relevant previous year will have to be treated as "reserves" as on such first day in computing capital of company

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.... as "reserves" as on such first day in computing capital of company 1. Attention is invited to the decision of the Supreme Court in the case of CIT v. Mysore Electrical Industries Ltd. [1971] 80 ITR 566 which has an important bearing on the provisions of the Explanation to rule 1 of the Second Schedule. The aforesaid Explanation, inter alia, provides that any amount standing to the credit of an a....

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....f this enunciation by the Supreme Court, the additions to reserves out of the profits of a particular "previous year" proposed by the directors of a company would, on being approved in the annual general meeting, shed their characters as proposed additions to reserves and will become part of the reserves of the company with effect from the first day of the immediately following "previous year". Ac....