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1992 (12) TMI 42 - SUPREME COURTWhether the Tribunal was justified in holding that there was a mistake apparent from the record in its order dated July 1, 1971, and in passing its miscellaneous order dated February 15, 1972 ? Whether the Tribunal was justified in directing that the following amounts should be excluded in computing the capital of the company under the provisions of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, i.e. Amount set apart for contingent liabilities, Amount set apart for proposed dividend, Provision for profit sharing bonus and Provision for pension scheme? Whether the amount of ₹ 9,97,410 being credited to the depreciation fund in excess of the amount actually allowed in the income-tax assessment was a reserve in depreciation which should be included in the computation of the assessee's capital for the purposes of the Companies (Profits) Surtax Act, 1964 ? Held that:- The Tribunal rendered its decision without taking note of the Explanation to rule 1 in Schedule II was undoubtedly a ground for rectification. The Tribunal's power to rectify its orders under the Act flows from section 1 of the Act. A mistake apparent from the record is made a ground for rectifying the order. The first question was, thus, rightly answered in favour of the Revenue and against the assessee. It is clear that the amount of ₹ 4,50,000 was a provision made to meet a tax liability existing on the relevant date by no stretch of imagination can it be treated as a reserve. Similarly, the second item, an amount of ₹ 15,82,000 set apart for proposed dividend cannot also be treated as a reserve but as a provision for meeting a current liability. The same must be said about the third item of ₹ 6,99,913, the amount set apart for profit-sharing bonus. With respect to the last item of ₹ 50,000 which was a provision for pension scheme, there can equally be no dispute that it is a provision. The amount of ₹ 9,97,410 credited to the Depreciation Fund was the excess amount over the amount actually allowed as depreciation in the assessments made under the Income-tax Act. It thus clearly constitutes reserves as per the decision in Vazir Sultan [1981 (9) TMI 105 - SUPREME Court]. The High Court was right in answering the same in favour of the assessee and against the Revenue.
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