Law: Income Tax Act, 1961

Section: 256

Income-tax-----Company---Surtax---Computation of capital---Reserves---Dividend---To be deducted from reserves---Indian Companies (Profits) Surtax Act, 1964. For the purpose of computing the capital base under the Companies (Profits) Surtax Act, 1964, the general reserve as on the first day of the previous year should be reduced by the amount of dividend declared later at the general body meeting. Indian Tube Co. (P.) Ltd. v. CIT (1992) 194 ITR 102 (SC) fol JUDGMENT THANIKKACHALAM, J.---In pursuance of the direction given by this Court T.C.C. No. 381 of 1979, dated January 5, 1979, the Tribunal referred the following question of law for the opinion of this Court under section 256(1) of the Income Tax Act, 1961: "Whether, on the facts and in the circumstances of this case, the Appellate Tribunal was correct in holding that the general reserve as on the first day of the previous year should not be reduced by the amount of dividend declared at a future date at the general body meeting for the purpose of computing the capital base under the Companies (Profits) Surtax Act, 1964 ?" A similar question came up for consideration before the Supreme Court of India in the case of Indian Tube Co. (P.) Ltd. v. CIT (1992) 194 ITR 102 wherein the…

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