Commissioner of Income Tax vs Atul Drug House Ltd.

Dr. B.P. Saraf, J.—By this reference under s. 256(1) of the IT Act, 1961, r/w s. 18 of the Companies (Profits) Sur-tax Act, 1964, the Tribunal has referred the following questions of law to this Court for opinion at the instance of the CIT as well as the assessee.

At the instance of the CIT

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that, in the assessee''s surtax assessment, r. 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, cannot be applied in respect of the deductions obtained by the assessee in its Income Tax assessment under Chapter VI-A of the IT Act, 1961?''''

At the instance of the Assessee

"2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the dividends, viz. (i) final dividend of Rs. 4,95,000 and (ii) a portion of the interim dividend amounting to Rs. 6,17,350 aggregating to Rs. 11,12,350 paid out of the balance of Rs. 55,25,090 standing to the credit of the General Reserve as on 1st Jan., 1970 had to be deducted from the said reserve for the purposes of computation of capital of the assessee-company as contemplated under r. 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 10,32,350 standing to the credit of the Special Reserve as on 1st Jan., 1970 was not includible in the capital computation for the purposes of statutory deduction under the Companies (Profits) Surtax Act, 1964 ?"

Questions are numbered consecutively for the sake of convenience.

The counsel for the parties are agreed that all the three questions are covered by the decisions of the Supreme Court and they may be answered accordingly.

The first question is covered by the decision of the Supreme Court in Second Income Tax Officer and Another Vs. Stumpp Schuele and Somappa (P) Ltd., . Following the same, we answer this question in the affirmative and in favour of the assessee.

Question Nos. 2 and 3 referred at the instance of the assessee are covered by the decision of the Supreme Court in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, in favour of the Revenue. Following the same, we answer both these questions in the affirmative i.e. in favour of the Revenue and against the assessee.

This reference is disposed of accordingly.

No order as to costs.