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TMI Blog1997 (11) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... stated a case and referred the following question of law for our consideration, under s. 256(1) of the IT Act, 1961. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the debenture redemption reserve should be included in the capital computation for surtax purposes? 2. The assessee, M/s Tube Investments of India Ltd. in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law set out above. 3. Mr. C.V. Rajan, learned counsel for the Revenue submitted that the debenture redemption reserve cannot be regarded as a reserve at all and the debenture redemption reserve is made to meet a known liability and therefore, it cannot be regarded as a reserve. In support of his submission, he strongly placed reliance on the recent decision of the Supreme Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Supreme Court in the case of National Rayon Corporation Ltd. Cited supra. The Supreme Court held that the amount set apart for redemption to meet a known liability cannot be regarded as a reserve but will be taken only as a provision and could not be included in the capital of the company. However, there are no basic facts found by any of the authorities whether the debenture redempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termine whether a portion of the debenture redemption reserve set apart by the assessee can be included in the computation of the capital of the assessee for the surtax purpose. Since the Tribunal has not posed the proper question and decided the question, we are of the view that the Tribunal should consider the question afresh in the light of the Supreme Court decision in the case of National Ray ..... X X X X Extracts X X X X X X X X Extracts X X X X
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