TMI Blog2003 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... e the statutory deduction for the purpose of its surtax assessment under the Companies (Profits) Surtax Act, 1964?"- we answer the questions in negative in favour of the Revenue. - - - - - Dated:- 17-7-2003 - Judge(s) : D. BISWAS., I. A. ANSARI. JUDGMENT The judgment of the court was delivered by D. BISWAS J.-This appeal under section 260A of the Income-tax Act, 1961, is directed against the order dated April 4, 2000, passed by the Income-tax Appellate Tribunal, Guwahati Bench, Guwahati, in S.T.A. Nos. 1,2,3,4 and 5 (Gauhati) of 1993. The Revenue challenged the aforesaid order on the ground that the learned Tribunal erred in law and fact in affirming the decision of the Commissioner of Surtax (Appeals) in including a sum of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of an assessee computed under the Income-tax Act of 1961, for the relevant year, after adjustment in accordance with the provisions of the First Schedule. The First Schedule of the Act provides the method for computation of the "chargeable profits". The chargeable profits are the total income computed under the Income-tax Act after deductions admissible under rule 1 of the First Schedule. The Second Schedule provides the procedure for computation of capital of the company for the purposes of surtax. The Second Schedule permits statutory deduction as defined in sub-section (8) of section 2. Ten per cent. of the capital of a company computed in accordance with the provisions of the Second Schedule, or an amount of two hundred thousand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal by a common judgment dated April 4, 2000, disposed of all the five appeals affirming the direction given by the Commissioner of Surtax (Appeals). The appellant's contention before this court is that the capital reserve of the nature at hand cannot be treated as a component of the capital under sub-rule (iii) of rule 1 of the Second Schedule. Mr. Bhuyan, learned counsel argued that the provisions of sub-rule (iii) of rule 1 have to be read with Explanation 1 to rule 2 of the Second Schedule. Before the questions raised by Shri Bhuyan, learned counsel are addressed, it would be apposite to mention here that the Commissioner of Income-tax (Appeals) and the learned Tribunal rejected the plea of the appellant on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company for the purposes of the Act. The assessee in the instant case acted on the net value of the assets as appearing in the books of the sterling tea company resulting in difference between the book value and the consideration paid. This difference of Rs. 1,43,89,055 had to be treated as other reserves to fill in the gap between the book value of the net assets and the consideration paid. By this exercise, on the part of the assessee, the reserve equivalent to shortfall was brought into existence by the assessee. Had there been no shortfall between the book value of the assets acquired and the price paid, the question of creation of other reserves would not have arisen. The shortfall obviously occasioned the creation of other reserves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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