- (1.) These appeals arise out of the judgment of the Bombay High court dated 30/7/1976 in I. T. Reference No. 152 of 1975 which related to the assessment years 1964-65, 1965-1966 and 1966-67. The following two questions were referred to the High court: 1 Whether on the facts and in the circumstances of the case the tribunal was justified in holding that the sums of Rs. 98,730. 00 for the assessment year 1964-65, Rs. 1,10,000. 00 for the assessment year 1965- 66 and Rs. 81,000. 00 for the assessment year 1966-67, representing provisions for gratuity were includible in computing the capital of the assessee company under Rule I of Schedule II of Companies (Profits) surtax Act, 1964 for the purpose of Surtax 2 Whether on the facts and in the circumstances of the case the tribunal was justified in holding that the sums of Rs. 3,20,000. 00 for the assessment year 1964-65, Rs. 3,48,943. 00 for the assessment year 1965- 66, and Rs. 4,62,609. 00 for the assessment year 1966-67, representing dividend reserves were includible in the computation of the capital of the assessee company under Rule I of Schedule II of the Companies (Profits) Surtax Act, 1964 for the purpose of surtax
(2.) The High court answered question no. 1 in favour of the assessee and question No. 2 in favour of the Revenue. The appeals relate to question No. 1. Learned counsel for the respondent concedes that the matter is now covered by the decision of this court in Vazir Sultan tobacco Co. Ltd. v. Commissioner of Income Tax. In view of the said decision, question No. 1 must also be answered in the negative. The appeals are therefore, allowed and the order of the High court is set aside, and question no. 1 is answered in the negative, i. e. , in favour of the department and against the assessee. There will be no orders as to costs.;