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TMI Blog1971 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... he Second Schedule to the Companies (Profits) Surtax Act, 1964, hereinafter referred to as the "Act". The Act which received the assent of the President on 2nd May 1964, is an Act to impose a special tax on the profits of certain companies. Under section 4 of the Act a tax known as surtax became chargeable on every company for every assessment year commencing on and from the 1st day of April, 1964, in respect of so much of its chargeable profits of the previous year as exceeded the statutory deduction, at the rates specified in the Third Schedule. Under section 2(3), "assessment year" means the period of twelve months commencing on the 1st day of April of every year. "Chargeable profits" is defined in section 2(5) as the total income of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation of India or the Industrial Credit and Investment Corporation of India or any other financial institution which the Central Government may notify in this behalf in the Official Gazette or any banking institution (not being a financial institution notified as aforesaid) or any person in a country outside India : Provided that such moneys are borrowed for the creation of a capital asset in India and the agreement under which such moneys are borrowed provides for the repayment thereof during a period of not less than seven years. Explanation.--For the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company as on the first day of the previous year relevant to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year ending on 31st March, 1963. The sole contention on behalf of the appellant is that these appropriations having been made on the 8th August, 1963, could not be treated as components of capital "as on the first day of the previous year", i.e., the first of April, 1963, in terms of rule I to the Second Schedule. The learned Solicitor-General submitted that these could only be taken into consideration in the subsequent year commencing on the 1st of April, 1964, on the ground that on the 1st of April, 1963, they only formed a part of the mass of undistributed profits, no portion of which had been earmarked or set apart for any particular purpose. In our view, this is not the correct way of appreciation of the action of the directors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,50,000 to dividend reserve fund. The report of the directors was made on April 27, 1949, and a general meeting of the shareholders held on 27th June, 1949, adopted the report and recommendation of the directors. The company was assessed to business profits tax chargeable under the Business Profits Tax Act for the accounting period 1st January to 31st March, 1949, and the question which arose was: what was the capital of the company for the accounting period. The company contended that its paid-up capital should be increased by the amount of reserves constituted by the recommendation made by the directors and accepted by the shareholders. The Commissioner of Income-tax went up to the High Court on a reference contending that as the reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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