TMI Blog1994 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the Revenue requesting decision of this court on the following questions of law: "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the reserve for bad and doubtful debts should be treated as reserve and should be included in the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer has held that the reserve for the bad and doubtful debts cannot be treated as a reserve and, therefore, excluded the same. On appeal, the Commissioner of Income-tax accepted the assessee's claim for treating the same as reserve following the decision of the Bombay High Court in CIT v. Golden Tobacco Co. Ltd. [1977] 108 ITR 453. This view of the Commissioner of Income-tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Department does not wish to press a decision on the second question and hence it is not considered necessary to answer the second question. As regards the third question, the Income-tax Officer deducted the dividends proposed in respect of the accounting years from the general reserve in computing the capital. The Commissioner of Income-tax (Appeals), following the decisions of this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion. Since these decisions of the apex court authoritatively decide the controversy, the first question referred to this court is answered by holding that the Appellate Tribunal was right in holding that the reserves for bad and doubtful debts should be treated as reserves and should be included in the capital for the levy of surtax. Question No. 1 is, therefore, answered against the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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