TaxTMI 
TaxTMI 
1969 (10) TMI 20
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....s not to be considered in computing the assessee's capital for the purpose of the Companies (Profits) Surtax Act, 1964 ? 2. On the facts and circumstances of the assessee's case, whether the Tribunal was justified in law in holding that the sum of Rs. 1,00,000 representing loan redemption reserve was not to be considered in computing the assessee's capital for the purpose of the Companies (Profits) Surtax Act, 1964 ? 3. On the facts and circumstances of the assessee's case, whether the Tribunal was justified in law in holding that the sum of Rs. 89,557 representing development rebate reserve, was not to be considered in computing the assessee's capital for the purpose of the Companies (Profits) Surtax Act, 1964 ? 4. On the facts an....
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....xpression " statutory deduction " to mean the amount equal to 10 per cent. of the capital of the assessee as computed in accordance with the provisions of the Second Schedule or an Amount of rupees two hundred thousand, whichever is greater. The excess of the chargeable profits over the statutory deduction is chargeable to tax under section 4. The provisions of the Act are substantially in accordance with the provisions of the Super Profits Tax Act, 1963, which remained operative only for the assessment year 1963-64. Rule 1 of the Second Schedule provides for computation of the capital of a company for the purposes of surtax. The Explanation to rule 1 which is relevant for the purpose of this case reads: " For the removal of doubts it is....
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....heir report to the general body of shareholders proposed the following appropriations out of the profits of the year ending on 31st March, 1963: Rs. Plant modernization and rehabilitation reserve 2,56,000 Loan redemption reserve 1,00,000 Reserve for development rebate 89,557 Dividend reserve 3,15,000 Reserve for super profits tax 2,85,000 The assessee claimed that the above items have to be computed as " other reserves " for the purpose of calculating the capital base. In addition to the above items, the assessee claimed that a sum of Rs. 1,03,162 representing the excess provision for depreciation has to be added to the capital. In our opinion rendered in T.R.C. No. 11 of 1967, we have held that provisions made for p....
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....is said to be the difference between the depreciation computed by the assessee on its assets and the depreciation allowed by the income-tax authorities. It was urged that to the extent of the difference, the value of the assets is enhanced and therefore the said item should be regarded as "Reserve". We are unable to accede to the said contention. The balance-sheet of the company does not show any such item as "Reserve". We are entirely in agreement with the view expressed by the Tribunal regarding the said item. The Tribunal has not specifically dealt with the items referred to in questions Nos. 1 to 3. That the amounts appropriated for "Plant modernization and rehabilitation reserve", "Loan redemption reserve" and "Development rebate reser....
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....ot possible for the board of directors of any company to make the appropriations out of the profits of any year before the close of the year of accounting. The Explanation to rule 1 states that any amount standing to the credit of any account in the books of a company as on the first day of a previous year relevant to the assessment year which is of the nature referred to therein shall not be regarded as a reserve. It follows from the language of the Explanation to the rule that the amounts in the nature of reserves standing to the credit of any account in the books of the company as on the first day of the previous year relevant to the assessment year shall be regarded as reserve for the purpose of computation of the capital of the company....