Commissioner of Income Tax vs Palani Andavar Mills (P.) Ltd.

Sethuraman, J.—The Commissioner of Income Tax has applied for reference of the following two questions:

" (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the rectification of mistakes involved an arguable and debatable question of law and, therefore, the revision of assessment u/s 13 of the Companies (Profits) Surtax Act, 1964, was not valid in law ?

(2) Whether the amounts set apart as, (i) machinery replacement reserve; (ii) contingency reserve; and (iii) dividend equalisation reserve are really ''reserves'' within the meaning of Rule 1(iii) of the Second Schedule of the Surtax Act, and hence they should be taken into consideration in the computation of the capital base ? "

We may first consider the second question before we take up the first. Out of the three reserves mentioned in the second question, the " machinery replacement reserve " and " dividend equalisation reserve " have already been the subject of consideration by this court in several decisions. The machinery replacement reserve was dealt with in Commissioner of Income Tax Vs. Craigmore Land and Produce Co. Ltd., and Additional Commissioner of Income Tax Vs. Craigmore Land and Produce Company Ltd., and the dividend equalisation reserve was dealt with in ADDITIONAL COMMISSIONER OF Income Tax, MADRAS-I Vs. THIRUMAGAL MILLS LTD. ADDITIONAL COMMISSIONER OF Income Tax, MADRAS v. ADONI SPINNING AND WEAVING CO. LTD., . As the matter is already concluded by the decisions of this court, we do not think that any useful purpose will be served by calling for reference of the question on the said reserves. As regards the contingency reserve, the learned counsel contended that it is not covered by any decision of this court. We consider that contingency reserve is only in the nature of a general reserve. We do not, therefore, find that any question of law can be said to arise out of the points raised in the second question. In this view of the matter the first question would assume only an academic interest even if there is a direction.

The result is, the petitions are dismissed with no order as to costs.