1984 (11) TMI 1

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....arises under section 18 of the Companies (Profits) Surtax act, 1964, read with section 256(1) of the Income-tax Act, 1961. The matter relates to surtax assessment year 1973-74. At the instance of the Commissioner of Income-tax, the following three questions of law are referred for the opinion of this court : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was corre....

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....for the purpose of arriving at the statutory deduction ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amounts deducted under sections 80G, 80K and 80M of the Income-tax Act, 1961, in the income-tax assessment were not liable to be taken into account for the purpose of making proportionate reduction of capital under rule 4 of the Sec....

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....ments will have to be treated as reserve for purposes of computation of capital under the Companies (Profits) Surtax Act. This principle is clearly set out by the Supreme Court in Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559. In the circumstances, the Tribunal was correct in holding that the sum of Rs. 2,37,085 constituted a reserve for purposes of computing the capital under the Surtax....