COMMISSIONER OF INCOME TAX Vs. PFIZER LTD

JUDGEMENT

(1.) The question referred to us by the Tribunal reads as under : "Whether on the facts and in the circumstances of the case, the balance-sheet of the assessee-company in the amount of Rs. 8,67,380 as on 1-12-1962, Rs. 10,92,617 as on 1-12-1965 and Rs. 14,91,611 as on 1-12-1964 constituted "reserves" as contemplated in r. 1 (iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964?"

(2.) Our attention was drawn to out earlier judgment in It Reference No. 63 of 1974, where we have considered a similar question (question No. 1 in the said Reference) and given certain directions following the decision of the Supreme Court in Vazir Sultan Tabacco Co. Ltd. v. CIT (1981) 25 CTR (SC) 186: (1981) 132 ITR 559 (SC). In the said decision we had also referred to an earlier decision of this High Court in CIT v. Gokak Mills Ltd. (1983) 32 CTR (Bom) 313: (1983) 142 ITR 525 (Bom). In Gokak mills case, the Division Bench had followed the guidelines indicated by the Supreme Court and gave certain direction to the Tribunal. In the instant case also we are required to give similar directions. Accordingly, as far as the question referred to us is concerned, we may proceed to answer the same without further discussion.

(3.) The question must be answered in the negative as far as all the three amounts in full are concerned viz. Rs. 8,67,380, Rs. 10,92,617 and Rs. 14,91,611. On remand the matter will have to be considered by the Tribunal in accordance with the observations of the Supreme Court to be found at page 578 of the report and it will have to be determined what part thereof could properly be said to be 'reserve'. The lower taxing authority will decide the question for all the three years in the light of the principles enunciated in Vazir Sultan Tabacco's case (supra) after giving opportunity to the assessee company to place additional relevant materials before it. If necessary such material can also be called for by the authority.