Law:

Section:

Rule 2 of Schedule II of the Super Profits Tax Act, 1963 - Super Profit Tax Computation of capital - Assessment year 1963-94 - During relevant accounting year assessee-company issued bonus shares to amount equivalent to paid up capital - Whether the expression 'paid-up capital' occurring in the Act does include therein even such reserve as had been capitalised without corresponding decrease in the reserve as computed with reference to the first day of previous year and consequently these should be reduction in chargeable profit in case of assessee - Held, yes FACTS During the course of the previous year (on 31-7-1962), the assessee-company issued bonus shares to the amount equivalent to the paid-up capital. According to the revenue under rule 2 of the Second Schedule of the Act, the capitalised part of the reserve as a result of the issue of bonus shares was also to the proportionately added to the paid-up capital. The Super Profits Tax Officer did not increase the total capital, as according to him the proportionate increase in paid up capital led to proportionate decrease in reserve. The failure on the part of the Super Profit Tax Officer to do so led to payment of more tax for which the assessee-company objected. The AAC dismissed appeal. On second appeal, the Tribunal held that it was incumbent upon the revenue to increase the paid-up capital due to the issue of bonus shares. As such there was proportionate increase in the total capital. The super profits for tax liability were held to decrease. On reference : HELD It is evident as stated under condition (c ) of Rule 2 that the capital computed in accordance with rule 1 and nothing short of it was to be increased. The revenue authorities intended to reduce the reserve to the extent of the amount of bonus share which according to them was the amount added to paid-up share capital. They could not do so under the plain language used in rule 2. It is the "capital computed in accordance with rule 1" which is to be increased and nothing less than that. The capital would necessarily mean the sum total of the paid-up capital as well as the reserve. To this figure shall be added the proportionate increase in the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492