1979 (7) TMI 70

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.... to tax was the amount which exceeded the statutory deduction. Section 2(8) defined statutory deduction as meaning an amount equal to ten per cent. of the capital of the company calculated in accordance with the provisions of the Second Schedule to the Act. The chargeable profits were, in view of s. 2(5), to be calculated on the basis of the income of an assessee computed under the I.T. Act, 1961, for a previous year or years adjusted according to the provisions of the First Schedule. The First Schedule set out the various exclusions which were to be made from the income computed for the purposes of the I.T. Act. The Second Schedule set out the manner of computing the capital of a company for the purposes of surtax. For the assessment ye....

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....depreciation was not liable to be treated as a reserve for computing the capital of the assessee-company under the Second Schedule to the Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 3,03,114 standing to the credit of the initial depreciation reserve account was not liable to be treated as a reserve, while computing the capital of the assessee under the Second Schedule to the Act ? " So far as the first question is concerned that is no longer res integra for the matter stands covered by the decision of this court in CIT v. Hind Lamps Ltd. [1973] 90 ITR 487. In that case, it was held that any excess amount by way of depreciation over that allowed by the I.....

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....l of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company as on the first day of the previous year relevant to the assessment year which is of the nature of item (5) or item (6) or item (7) under the heading 'RESERVES AND SURPLUS' or of any item under the heading 'CURRENT LIABILITIES AND PROVISIONS' in the column relating to ' Liabilities ' in the ' Form of Balance-sheet ' given in Part I of Schedule VI to the Companies Act, 1956 (1 of 1956), shall not be regarded as a reserve for the purposes of computation of the capital of a company under the provisions of this Schedule. " The claim for treating the initial depreciation reserve is sought to be founded on r. 1(iii) of the Second S....