SATISH CHANDRA,.J. - (1.) THESE two references raising similar questions have been made by the Tribunal in cases relating to the same assessment company in respect of two different assessment years, namely, 1963 -64 and 1965 -66.
(2.) IN respect of the assessment year 1963 -64 the following question has been referred at the instance of the Commissioner in I.T.R. No. 503 of 1974 : "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the amount of Rs. 33,45,417/ - on account of provisions of taxation and Rs. 11,00,844/ - on account of proposed dividend was to be included in the computation of capital under the Super Profits tax Act, 1963 ?"
(3.) IN respect of the assessment year 1965 -66 the following question has been referred at the instance of the assessee in I.T.R. No. 504 of 1974 : - "Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal erred in law in confirming the exclusion of a sum of Rs. 8,80,675/ - in the computation of capital by the appellant for purposes of surtax under the Second Schedule to the Companies Profits Surtax Act, 1964 ?" In both the relevant enactments, namely, the Super Profits Tax Act, 1963, and the Companies (Profits) Surtax Act, 1964, tax was due at specified rate on so much of the chargeable profits of the previous year as exceeded the statutory deduction as defined in the respective enactments. This statutory deduction was a percentage of the capital of the company as computed in accordance with each Act. The rules laid down in either Act for computation of the capital of a company provide that its paid -up share capital, reserves created under certain specified provisions of the I.T. Ac, 1922 or the Income Tax Act, 1961, and, inter alia, "its other reserves" shall be aggregated. In the Companies (Profits) Surtax Act, 1964, this rule in followed by an Explanation, which is in the following terms : "For the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company as on the first day of the previous year relevant to the assessment year which is of the nature of item (5) or item (6) or item (7) under the heading "Reserves and surplus" or of any column relating to Liabilities" in the "Form of Balance -sheet" given in Part -I of Schedule VI to the Companies Act 1956 (I of 1956) shall not be regarded as a reserve for the purposes of computation of the capital of company under the provisions of this Schedule".;