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Section 4 of Super Profits Tax Act, 1963 - Charge of tax - Whether where there was no indication that sum shown as 'Reserves and Surplus' in balance-sheet of assessee-company - Constituted a reserve of any kind, sum was nothing more than a mass of undistributed profits and could not be taken into consideration in computing capital of assessee-company for the purpose of determining standard deduction as contemplated in section 2(9) - Held, yes FACTS The Tribunal held that the amount shown under 'Reserves and Surplus' in the balance-sheet was not to be taken into consideration in computing the capital of the assessee-company for the purpose of determining the Standard deduction as contemplated under section 2(9) and the Schedules mentioned therein Act. On reference : HELD The word "reserve" is not defined in the Act, just as in the Business Profits Tax Act, 1947, which came up for consideration before the Supreme Court in Commissioner of Income-tax v. Century Spinning and Manufacturing Co. Ltd. [1953] 24 ITR 499 , 503, 504 in which the Supreme Court held that the reserve may be a general reserve or a specific reserve, but there must be a clear indication to show whether it was a reserve either of the one or the other kind and the fact that it constituted a mass of undistributed profits could not automatically make it a reserve. In the instant case, there was no indication whatsoever that the sum constituted a reserve of any kind. It was, nothing more than a mass of undistributed profits on 31-3-1963. Hence, the Tribunal was right in taking the above view. Note : The case was decided against the assessee. CASES REFERRED TO CIT v. Century Spinning and Mfg. Co. Ltd. [1953] 24 ITR 449 (SC), CIT v. Standard Vacuum Oil Co. [1966] 59 ITR 685 (SC) and First National City Bank v. CIT[1961] 42 ITR 17 (SC) JUDGMENT This is a reference at the request of the assessee by the Income-tax Appellate Tribunal, Madras Bench. The assessee is a public limited company, the Aluminium Industries Limited, Kundara. The assessment year concerned is 1963-64; and the accounting period, the 12 months ended on March 31, 1963. The question referred is: "Whether, on the facts and circumstances of…

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