Law:

Section:

Section 2(8) of the companies (profits) surtax act, 1964-Statutory deduction-Whether amount adjusted as excess depreciation charged in earlier years could not be treated as part of capital of assessee-company for determining statutory deduction under section 2(8)-Held, yes Section 18 of the companies (profits) surtax act, 1964, read with section 261 of the income-tax act, 1961-Application of provisions of 1961 act-Whether certificate of fitness for appeal to supreme court can be granted on question whether an amount set apart in excess of what was actually required for depreciation purpose will automatically amount to reserve or will continue to remain part of mass of undistributed profits of company while determining capital of company-Held, yes Facts For the assessment year 1975-76, the assessee-company, in computing its capital for surtax purposes, made adjustments of certain amounts in respect of the excess depreciation charged in earlier years. The Tribunal, relying on the of the High Court in the assessee's own case for the assessment year 1973-74, found that the amount adjusted could not be treated as part of the capital for the purpose of determining statutory deduction under section 2(8). The assessee-company also prayed for a certificate of fitness for appeal to the Supreme Court if the High Court disallowed its appeal. On reference : Held In view of the of the High Court in the assessee's own ease for the previous assessment year, the amounts adjusted as excess depreciation charged in earlier years could not be treated as part of the capital of the company for determining statutory deduction under section 2(8). The question whether an amount set apart in excess of what is actually required for depreciation purpose will automatically amount to reserve or will continue to remain a part of the mass of undistributed profits of the company is an important question of law. There is no of the Supreme Court on this point. Therefore, a certificate of fitness for appeal to the Supreme Court could be issued to the assesse'e-company under section 261 of the Income-tax Act, 1961 read with section 18 of the Companies (Profits) Surtax Act, 1964. IT REFERENCE NO.…

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