1991 (4) TMI 87

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....585 declared on May 3, 1972, should go to reduce the general reserve of Rs. 4,01,10,167 as at January 1, 1972, for the purpose of computing the capital in terms of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the assessment year 1973-74 ? 2. Whether, on the facts and in the circumstances of the case, the debenture redemption reserve of Rs. 1,41,00,000 constitutes a reserve includible in the computation of capital in terms of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the assessment year 1973-74 ? 3. Whether, on the facts and in the circumstances of the case, the gratuity reserve of Rs. 17,00,000 constitutes a reserve includible in the computation of capital in terms....

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....serve and gratuity reserve in this case were not claimed as a charge against the profits, he contended that these two reserves ought to be treated as reserves rather than provisions. Shri Mehta also invited our attention to the Calcutta High Court decision in the case of CIT v. Placid Lid. [1984] 150 ITR 74 and the Karnataka High Court decision in the case of Addl. CIT v. Bharat Fritz Werner (P.) Ltd. [1979] 118 ITR 25, where redemption reserve in respect of preference shares was held to be a "reserve". We have gone through the above three decisions of the Supreme Court as well as the Calcutta and Karnataka High Courts' decisions relied on by Shri Mehta carefully. No doubt, there is an observation in the Supreme Court decisions that a pr....