COMMISSIONER OF INCOME TAX Vs. HINDUSTAN SUGAR MILLS LIMITED

JUDGEMENT

(1.) THE following two questions are referred for our determination :

(2.) SO far as this reference is concerned, the facts need not be stated because the principles on the basis of which the questions are to be answered have been fully laid down in more than one decision of our court decided to -day and few days earlier.

(3.) SO far as assessment year 1966 -67, is concerned, instead of transferring the amount to the dividend reserve, the amount of Rs. 25,00,000 was transferred to the general reserve and the sum of Rs. 18,35,715 was directed to be paid as dividend for the same year from the amount standing to the credit of the general reserve. It is clear that the nomenclature given to an account is not conclusive. The sum of Rs. 18,35,715 was the proposed dividend in relation to the year ending June 30,1964, and it is not includible in the computation of capital of the assessee -company. Thus, our answer to question No. 2 is that the general reserve to the extent of Rs. 18,35,715 as on July 1, 1964, was not includible in the computation of capital of the assessee -company but the sum of Rs. 6,64,285 as on July 1, 1964, was includible in the computation of capital of the assessee -company under rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, for the assessment year 1966 -67.