Commissioner of Income Tax vs Rashtriya Metal Industries

S.P. Bharucha, J.—The question that arises in this reference reads thus:

"Whether, on the facts and in the circumstances of the case, the sums of Rs. 60,000 and Rs. 7,62,000 representing ''Gratuity reserve'' and ''Provision for taxation'' respectively, are includible in the capital computation of the assessee under rule 1 of the Second Schedule to the Super Profits Tax Act, 1963, for the assessment year 1963-64 ?"

In view of the Supreme Court decision in Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, it is only the excess of provision for taxation or gratuity reserve over actual liability which requires to be treated as reserves for the purpose of capital computation. However, the relevant material required for the purpose of capital computation. However, the relevant material required for the purpose is not available on record. In the circumstances, we have to direct the Tribunal to determine the excess of the provisions over liabilities in respect of both these items in the light of the principles enunciated in the aforesaid decision and treat the excess, if any, only as reserves for the purpose of capital computation.

The order is accordingly made. No order as to costs.