Dipak Kumar Sen, J. - (1.) Orient Paper Mills Limited is a company within the meaning of the Companies Act, 1956, and is an assessee under the Companies (Profits) Surtax Act, 1964 (hereinafter referred to as the "said Act"). In the assessment year 1972-73, the accounting period being the calendar year ending on March 31, 1972, the assessee was assessed to surtax under the said Act. In computing the capital of the assessee for determining the statutory deduction, the assessee had included an amount of Rs. 3,73,080 shown as forfeited dividend in its capital.
(2.) The ITO held that forfeited dividends did not have the character of reserve as they were in the nature of liabilities and, therefore, excluded the same in computing the capital of the assessee.
(3.) On appeal, the AAC upheld the assessment following a decision of the Allahabad High Court. On further appeal by the assessee, the Income-tax Appellate Tribunal, following its earlier decision in the case of the assessee for the assessment year 1963-64, affirmed the order of the AAC.;