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Judgment
S.P. Bharucha, J.—This reference is made at the instance of the Revenue. The questions raised read thus :
In R.A. No. 1124 (Bom) of 1975-76 :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the relief granted to the assessee u/s 80-I did not call for a reduction of the capital as contemplated in rule 4 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 right in holding that the proposed dividends to be paid out of general reserve should not be deducted from the general reserve for the purpose of capital computation ?"
In R.A. No. 1125 (Bom) of 1975-76 :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the relief granted to the assessee u/s 80-I did not call for a reduction of the capital as contemplated in rule 4 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 right in holding that the proposed dividends to be paid out of the general reserve should not be deducted from the general reserve for the purpose of capital computation ?"
Counsel are agreed that the first question in both reference applications must be answered in the affirmative and in favour of the assessee in view of the judgments of this court in Commissioner of Income Tax, Bombay City III Vs. Century Spg. and Mfg. Co. Ltd., , and Commissioner of Surtax, Vidarbha and Marathwada Vs. Ballarpur Industries Ltd., . Counsel are also agreed that the second question in both reference applications must be answered in the negative and in favour of the Revenue in view of the Supreme Court''s judgment in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, . The questions are so answered.
No order as to costs.