- (1.) This appeal is preferred by the assessee against the judgment of the Gujarat High court answering the question, referred at the instance of Revenue, against the assessee. The followingquestion was referred under Section 256 (1 of the Income Tax Act for the opinion of the High court: "Whether on the facts and in the circumstances of the case, the following amounts are to be included in the computation of capital of the assessee company under Rule I of the Second Schedule of the Super Profits Tax Act, 1963: 487. htm "
(2.) Though the question refers to four items, we are concerned in this appeal only with the first item. We shall, therefore, state the facts only insofar as they are relevant to the said item.
(3.) The assessee is a private limited company. The assessment year concerned is 1963-64. Sometime in 1955-56, a notice was issued to the assessee under Section 23-A of the Income Tax Act, 1922. Apprehending that it may become liable to pay additional tax under the said provision, the assessee set apart a sum of Rs. 6,52,000. 00 in its books for the year ending 31/03/1956. Out of this amount an amount of Rs. 2,02,000. 00 was transferred to the profit and loss account during the year 1958-59, with the result that a sum of Rs. 4,50,000. 00 continued to remain and was shown as a provision set apart to meet the taxation liability which the assessee called a contingent liability. At the same time the assessee had been contesting the proceedings taken against it under Section 23-A. Though it failed at the earlier stages, it succeeded ultimately in the Letters Patent Appeal filed by it in the East Punjab High court. In the said appeal decided on 24/05/1965, it was held that no action can be taken against the assessee under Section 23-A. With this order, all the orders passed and notices issued under the said provision prior to the date of the said judgment stood vacated.;