Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, the order of the Tribunal holding that the sum of Rs. 58,85,850, being the excess of the amount of depreciation reserve over the amount of depreciation allowed under the Income-tax Act, was a reserve within the meaning of Rule 1 of the Second Schedule to the Super Profits Tax Act, 1963, is justified in law ?"
(2.) The point was disposed of by the Tribunal for the reasons which are best set out in the words of the Tribunal as follows : "It was found that over the years, the assessee had debited in its books depreciation which was in excess of the depreciation allowed under the Income-tax Act by a sum of Rs. 58,85,850. The assessee claimed that this sum should be treated as reserve and included in the computation of capital. But this contention was rejected by the revenue authorities. (ii) It has been held by their Lordships of the Gujarat High Court in the case of CIT v. Viramgam Mills Co. Ltd. [1961] 43 ITR 270 at p. 279, that if any part of the amounts deducted for depreciation did not represent the true amount of depreciation suffered by the buildings and machinery of the asseseee-company, then to the extent of such excess it could be said that the reserve had been built up out of the profits of the company. The present appeal comes squarely within the ratio of the above judgment. We, therefore, accept the assessee's contention that the depreciation provided in the books in excess of the depreciation allowed for income-tax assessment should be treated as reserves for computation of capital."
(3.) As we have noticed before, the short question is whether the excess amount of the depreciation of the sum of Rs. 58,85,850 should be allowed to be considered as a reserve within the meaning of Rule 1 of the Second Schedule to the S.P.T. Act, 1963.;