- (1.) These two connected appeals, one by the Commissioner of Income-tax, Bombay, and the other by the Century Spinning and Manufacturing Co. Ltd., arise out of the judgment and order of the Bombay High Court delivered on a reference made by the Income -tax; Appellate Tribunal, Bombay
(2.) The two questions of law referred by the Tribunal were as follows. (1) Whether the, amount of Rs. 5,08,637/- is a part of the reserves' of the assesses company as on l-4-1946, within the meaning of R. 2(1) of the Rules in Sch. II to the Business Profits Tax Act, and (2) Whether the profits of the assessee Company from 1st January to 1st April, 1946, should be included in the said reserves as on lst April, 1946. The High Court answered the first question in the affirmative and the second in the negative.
(3.) The accounting- year followed by the assesses is the Calendar year and the chargeable accounting period is 1-4-1946 to 31-12-1946, in respect of the profits ending with 31-12-1945. The profits according to the profit and loss account were Rs. 90,44,677 subject to the provisions for depreciation and taxation. After making provisions for these, the balance of Rs. 5,08,637 was carried to the balance-sheet.;