COMMISSIONER OF INCOME TAX Vs. AMALGAMATIONS REPCO LIMITED

JUDGEMENT

(1.) THE Revenue relied on the law laid down by the Bombay High Court in the case of CIT v. Zenith Steel Pipes Ltd. [1978] 112 ITR 215. We are in entire agreement with the law laid down therein that if the assessee obtains deduction for a higher sum towards depreciation, but shows a lesser sum as the amount of depreciation in the profit and loss account and thereafter credits the difference between the two figures of depreciation to a general reserve, such a general reserve will have to be reduced by the amounts so credited while computing the capital base of the company for the purpose of determining the chargeable profits.

(2.) RULE 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964, reads thus :

(3.) THE questions referred to us at the instance of the Revenue, viz.,