COMMISSIONER OF INCOME TAX Vs. PFIZER LIMITED

JUDGEMENT

(1.) THIS reference raises, at the instance of the Revenue, the following two questions :

(2.) COUNSEL are agreed that the issue in the first question is concluded by the judgment of the Supreme Court in Vazir Sultan Tobacco Co. Ltd. vs. CIT (1981) 25 CTR (SC) 186 : (1981) 132 ITR 559 (SC). The Tribunal shall assess what part of the gratuity reserve is a provision towards an existing liability and give relief in respect thereof.

(3.) UNDER S. 4 of the Companies (Profits) Surtax Act, 1964, surtax is chargeable on every company in respect of so much of its chargeable profits as exceed the statutory deduction at the rates specified in the Third Schedule thereto. "Statutory deduction" is defined by S. 2(8) to mean an amount equal to ten per cent of the capital of the company as computed in accordance with the provisions of the Second Schedule to the Act. The Second Schedule sets out the rules for computing the capital of a company and its relevant portions, for the purposes of this reference, are these :