1996 (4) TMI 55

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....at the beginning of the accounting period should be included as part of the capital base under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?" The assessee is a public limited company and the assessment year involved is 1979-80 for which the accounting year ended on December 31, 1978. The Surtax Officer, while computing the statutory allowance, reduced the capital employed to the extent of Rs. 10 lakhs which represented "preference share redemption reserve" on the view that such reserve was earmarked for a known liability, namely, redemption of preference shares of the company, and as such the reserve was in the nature of a provision which has to be excluded from the capital computation. On appeal by the assessee, t....

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....assessee had called the reserve as the preference share capital redemption reserve. Even though the nomenclature of the reserve was different from what was mentioned in section 80 of the Companies Act, 1956, the reserve was capital redemption reserve referred to therein and referred to in item (2) under the heading 'Reserves and Surplus' in Part I of Schedule VI to the Companies Act. Therefore, the Tribunal was right in including the sums of Rs. 1,50,000 and Rs. 6,00,000 in the capital base during the relevant assessment years for purposes of determining the quantum of statutory deduction to which the assessee was entitled during the respective years." The Andhra Pradesh High Court also had an occasion to consider the question of similar....