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TMI Blog1973 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... er 31, 1961, was Rs. 6,26,772.64 and there was a brought forward profit of Rs. 6,227.94 from the earlier year. The accounts for the said year were considered by the board of directors on May 31, 1962, and the following appropriations had been made before declaring the dividends : Rs. Provision for tax 3,60,000 Proposed dividends 2,31,470 For the purpose of computation of capital as on January 1, 1962, the assessee claimed that the above sums as also a sum of Rs. 2,60,000 set apart for payment of advance tax for the earlier year should be taken as "other reserves" occurring in rule 1 of Schedule 2 to the Super Profits Tax Act, 1963 (hereinafter referred to as "the Act"). The Super Profits Tax Officer, however, held that the above sums we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he managing agents acted under the authority of the board of directors, that the authority to make the appropriation was only with the board of directors and that in view of the decision in Century Spinning and Manufacturing Co.'s case, the appropriation having been made by the competent authority, the board of directors, only on May 31, 1962, the sums referred to above did not represent any reserve. In respect of the sum of Rs. 2,60,000 appropriated towards tax by the competent authority in the earlier year the Tribunal, following the decision of the Supreme Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax held that the sum represented the present liability and a provision to discharge that liability cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of undistributed profits became effective from that day." In our view the said decision of the Supreme Court which directly dealt with rule 1 of Schedule 2 of the Companies (Profits) Surtax Act, 1964 which is somewhat similar to rule 1 of Schedule 2 of the Act and uses the words "as on the first day of the previous year" as distinguished from the words "on the first day of the previous year" used in rule 2(1) of Schedule 2 of the Business Profits Tax Act, 1947, which was considered by the Supreme Court in Centuary Spinning and Manufacturing Co.'s case, the reasoning of the Tribunal that the sum in question represented mass of undistributed profits on January 1, 1962, cannot be accepted. As already stated, the sum of Rs. 6,20,000 repr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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