Commissioner of Income Tax vs Inarco Ltd.

S.P. Bharucha, J.—The two questions to be answered in this reference related to the assessment year 1972-73. They read thus :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 14,40,000 being dividend for 1970 calendar year should not be excluded from the general reserve for the purpose of computing the capital base under the Surtax Act, 1964 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that rule 4 under the Second schedule to the Surtax Act did not apply, since the deduction allowed u/s 80-I formed part of the total income ?"

The first question must be answered in the negative and favour of the Revenue, having regard to the judgment in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, . The second question, it is agreed, is covered by the decision in Commissioner of Income Tax, Bombay City III Vs. Century Spg. and Mfg. Co. Ltd., . The question is, accordingly, answered in the affirmative and in favour of the assessee.

No order as to costs.