1976 (7) TMI 39

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....on referred to us for determination is : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the dividends paid out of the general reserve had to be ignored for the purpose of capital computation as the entire general reserve was in the nature of a reserve ? " This question is raised in relation to computation of capital for the purpose of....

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.... paid out of the general reserve. For this assessment year 1970-71, the question ,irises whether this sum of Rs. 2,10,000 forming part of the general reserve is includible in the capital of the company for the purpose of surtax. For the assessment year 1971-72, the relevant date for computation of the capital is December 1, 1969. The position shown by the balance-sheet as on November 30, 1969, ....

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....of the assessee, has submitted that as there was an outstanding balance sufficient to pay the dividend for two years, the said amount ought not to be taken while computing the capital of the company for the purpose of surtax. Such a contention could be accepted only if the directors in the report had specifically stated that for the purpose of payment of dividend recommended by them the past balan....