Chakravartti, C.J. - (1.) This is a reference under Section 66(1), Income-tax Act, read with Section 19 Business Profits Tax Act by the Calcutta Bench of the Appellate Tribunal of three questions of law. The facts are as follows,
(2.) The common feature of the three questions is that, by each the Court's opinion is asked as to whether a certain amount was entitled to be treated as reserve for the purpose of the computation of capital in order that the abatement allowable to the assessee might be determined. The chargeable accounting periods are two, the first being 1-4-1946 to 31-3-1947, and the second being 1-4-1948 to 31-3-1949. With regard to the first chargeable accounting period, the -material fact is that the' balance sheet of the assessee company as at 31-3-1946, or what is the same thing, 1-4-1946, showed as unappropriated balance of Rs. 12,33,417/-. That sum was made up of two smaller sums. The first of the latter sums was an amount of Rs. 44,233/- which had been carried forward out of the balance as at 31-3-1945, and the second sum wets an amount of Rs. 11,89,183/-which was the balance of the profit for the year ending on 31-3-1946. The assessee company claimed that it was entitled to have the entire sum of Rs. 12,33,4177- treated as a reserve for the purposes of the computation of its capital under Rule 2(1) of Schedule II to the Business Profits. Tax Act of 1947. The Tribunal allowed the assessee's claim with regard to the smaller sum of Rs. 44,233/-, but rejected it with respect to the larger sum of Rs. 11,89,183/-.
(3.) With regard to the second chargeable accounting period, the material fact is that the balance sheet as at 31-3-1948, or what is the same thing at as 1-4-1948, "showed an unappropriated balance of Rs. 11,95,043/-. That sum was made up of two smaller sums. The first of those smaller sums was an amount of Rs. 14,553/- which had been carried forward out of the balance as at 31-3-1947, and the second of those sums was an amount o Rs. 11,80,489/- which was the balance of the profits for the year ending on 31-3-1948. As in connection with tile other chargeable accounting period so in connection with this, the assessee company claimed that the whole of the amount of Rs. 11,95,043/-should be treated as a reserve for the purposes of Rule 2(1) of Schedule II to the Business Profits Tax Act. The Tribunal allowed the assessee's claim with respect to the smaller sum of Rs. 14,553/-, but disallowed it with respect to the larger sum of Rs. 11,80,489/-.;