9911796707
TMI Blog1991 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... .-In this departmental reference relating to the assessee's surtax assessment for the assessment year 1965-66, the Tribunal has referred to this court the following three questions of law for opinion under section 256(1) of the Income-tax Act, 1961, as applied to surtax by section 18 of the Companies (Profits) Surtax Act, 1964 : "(1) Whether, on the facts and in the circumstances of the case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its) Surtax Act, 1964, for the assessment year 1965-66 ?" Counsel are agreed that, in so far as questions No. 1 and 3 are concerned, the issues involved herein are covered by the Supreme Court decision in the case of Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559 and that, in view thereof, neither retirement gratuity reserve nor taxation reserve has to be treated as reserves as such but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, in the present case, no reserve for the purpose of dividend was created out of the profits for the year, i.e., the previous year, July 1, 1963 to June 30, 1964. He also pointed out that, as held by the Supreme Court, the dividend proposed and approved by the shareholders in a general meeting held subsequently does not relate back although if a reserve is created out of the profits of the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-sheet as on December 31, 1963, into account. No doubt, our court has, at a number of places, stated that if reserve is created out of the profits of the year, the dividend to be distributed out of such a reserve makes that reserve a provision to the extent thereof. However, the expression "year" evidently meant the year ending December 31, 1963. It could not, by any stretch of imagination, be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [1981] 132 ITR 559. We are told that the actual dividend declared was Rs. 9,37,500 only. Therefore, we will answer the second question thus : The dividend reserve of Rs. 10,00,000 to the extent it is in excess of the amount of the dividend proposed and actually declared, i.e., Rs. 9,37,500 alone is to be treated as reserve. No order as to costs. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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