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TMI Blog2002 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... f surtax the credit balance in the profit and loss account is to be deducted, and that such balance cannot be treated as reserve. Whether, on the facts and circumstances of the case, the credit balance in the profit and loss account can be included on the part of the reserve for the purpose of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964?" - Having regard to the law en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years are 1981-82 and 1982-83. The question referred to us is: Whether, on the facts and circumstances of the case, the credit balance in the profit and loss account can be included on the part of the reserve for the purpose of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964?" Learned counsel for the assessee placed strong reliance on the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration Ltd. v. CIT [1997] 227 ITR 764. The court in that case noted the fact that in Vazir Sultan Tobacco Co. Ltd.'s case [1981] 132 ITR 559 (SC): "it was pointed out that even if a sum of money which had been set apart for a certain purpose was held not to be a 'provision', it did not automatically follow that it would be a reserve". In the case of Vazir Sultan Tobacco Co. Ltd.'s case [1981] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as 'reserve' for the purpose of computation of capital. It is further to be noted that the surplus and unallocated balance in the profit and loss account has been specifically excluded from 'reserves' for computation of capital under the Surtax Act. Therefore, availability of the amount for utilisation as working capital of the company or for distribution of dividend cannot be a criterion fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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