Dipak Kumar Sen, J. - (1.) This reference arises out of an assessment of super profits tax of the applicant, Orient Paper Mills Ltd., in the assessment year 1963-64. The corresponding previous year ended on the 31st March, 1963. At the instance of the assessee, the Tribunal has referred to this court the following question, under Section 256(1) of the Income-tax Act, 1961. " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that forfeited dividend of Rs. 3,18,148, provision for taxation of Rs. 44,23,892 and proposed dividend of Rs. 48,24,530 were not reserves for purposes of computation of capital of the assessee-company within the meaning of the Second Schedule to the Super Profits Tax Act, 1963"
(2.) The facts found by the Tribunal including those which are matters of record may shortly be stated as follows : In the assessment year in question it was claimed by the assessee that forfeited dividend of the amount of Rs. 3,18,143, provision for taxation of the amount of Rs. 44,23,892 and proposed dividend of Rs. 48,24,530 should be treated as reserve within the meaning of the Second Schedule to the Super Profits Tax Act, 1963, for the purpose of computation of capital.
(3.) The Super Profits Tax Officer rejected the contention of the assessee in respect of each of the said amounts. On appeal, the Appellate Assistant Commissioner confirmed the order of the Super Profits Tax Officer. He held, inter alia, that the amount under the head " forfeited dividends " could not be called a reserve since it was in the nature of a " liability fund ". Dividend would become payable out of this amount as and when claims would be made by shareholders.;