CST CIT Vs. SUHRID GEIGY LIMITED

JUDGEMENT

(1.) AT the instance of the Revenue, the Tribunal, Ahmedabad Bench "B", has referred for the opinion of this Court, the following question under S. 18 of the Companies (Profits) Surtax Act, 1964, r/w s. 256(1) of the IT Act, 1961 :

(2.) THE relevant assessment years are 1965 66, 1966 67 and 1968 69. The assessee, a limited company, carries on the business of manufacture of medicines. In respect of the amounts shown in the gratuity reserve account for the respective years, the Surtax Officer in the course of assessment proceedings held that the amount standing to the credit of the gratuity reserve account did not represent the reserve for the purpose of inclusion in the capital employed. In appeal, the AAC disagreeing with the Surtax Officer and allowing the appeal of the assessee, directed the Surtax Officer to include the amount of the gratuity reserve as part of the capital to be computed for the purposes of the Second Schedule to the Act. The Revenue thereupon preferred an appeal before the Tribunal and the Tribunal held that the gratuity reserve was includible in computing the capital of the company for the purpose of surtax.