COMMISSIONER OF INCOME TAX Vs. WARNER HINDUSTAN LIMITED

JUDGEMENT

(1.) THIS reference arises under section 18 of the Companies (Profits) Surtax Act, 1964, read with section 256(1) of the Income-tax Act, 1961, and it relates to the assessment year 1971-72. The Income-tax Appellate Tribunal referred the following three questions of law for the opinion of this court :

(2.) IT is necessary to notice a few facts in order to appreciate the contentions involved.

(3.) SINCE the controversy centres round Explanation I under rule 2 of the Second Schedule, it is necessary to extract the same :