- (1.) In civil Appeal No. 1546 of 1974 the following items were involved : (a) Capital Reserve, (b) Stocks and stores reserves, (c) Bad and doubtful debts reserves, (d) Obsolesence reserve, (e) Loans and Insurance reserve, (f) Investment reserve and (g) Forfeited moneys reserves. The question was whether these were to be included in the computation of capital according to the provisions in the second schedule to the Super Profits Tax Act, 1963.
(2.) Under S. 4 of the Super Profits Tax Act, 1963, every company shall be charged for every assessment year commencing from 1st April, 1963 a tax as Super Profits Tax in respect of so much of its chargeable profits of the previous year as exceed the standard deductions at the rate or rates specified in the third schedule. 'Standard deduction' had been defined in cl. (9) of S. 2 as follows : "An amount equal to six per cent of the capital of the company as computed in accordance with the provisions of the second schedule; or an amount of Rs. 50,000-whichever is greater."
(3.) The second schedule contained rules for computation of capital of a company for the purpose of the said Act.;