Sabyasachi Mukharji, J. - (1.) This reference arises from the assessment proceedings under the Companies (Profits) Surtax Act, 1964. We are concerned with the assessment year 1964-65, the relevant previous year ending on 31st March, 1964.
(2.) Under the Companies (Profits) Surtax Act, 1964, there is a charge of tax on the chargeable profits of the previous year in accordance with the rule set out in the Third Schedule to that Act, "Chargeable profits" mean the total income of the assessee computed under the I.T. Act, 1961, for any previous year and adjusted in accordance with the provisions of the First Schedule to that Act. It is not necessary for us to go into the adjustments provided in the First Schedule for the present purpose. Under Section 2(8) of the said Act there was statutory deduction for an amount equal to 10 per cent. of the capital of the company as computed in accordance with the provisions of the Second Schedule to that Act or Rs. 2,00,000, whichever. was greater. In the Second Schedule the computation of capital was shown as follows : (a) Paid up share capital, (b) Development rebate reserve, and (c) Other reserves in so far as the amounts credited to such other reserves had not been allowed in computing the profits for the purpose of income-tax.
(3.) There are other items to be added and some deductions to be made from the aggregate of the above. For our present purpose it is not necessary to go into these aspects. Only on the net amount remaining after the adjustment of the statutory deduction against the chargeable profits surtax was imposed.;