Commissioner of Income Tax vs Sijua (Jharriah) Electric Supply Co. Ltd.

Suhas Chandra Sen, J.—The Tribunal has referred the following question of law u/s 256(1) of the Income Tax Act, 1961, to this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reserve for contingencies of Rs. 4,07,707 and the reserve for debenture redemption of Rs. 12,80,000 should be taken into account for the purpose of computation of capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the assessment year 1975-76 ?"

The assessment year involved is 1975-76. The question has been gone into and decided in the assessee''s own case in an earlier year''s reference being the case of Commissioner of Income Tax Vs. Sijua (Jharriah) Electric Supply Co. Ltd., .

Following that judgment, the first part of the question relating to reserve for contingency is answered in the affirmative and in favour of the assessee.

So far as the reserve for debenture redemption is concerned, we direct the Tribunal to examine the case once more in the light of the observations made in the judgment in the case of Commissioner of Income Tax Vs. Sijua (Jharriah) Electric Supply Co. Ltd., and decide the case afresh on this aspect of the matter.

In the premises, the first part of the question is answered by saying that the Tribunal was justified in including the reserve for contingencies as a reserve for computation of capital under the Second Schedule to the Companies (Profits), Surtax Act, 1964, for the assessment year 1975-76.

For the reasons indicated above, we decline to answer the question whether the Tribunal was justified in including the reserve for debenture redemption as a reserve for computation of capital according to the Second Schedule to the Companies (Profits) Surtax Act, 1964.

There will be no order as to costs.

Bhagabati Prasad Banerjee, J.

I agree.