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Documents citing Commissioner Of Income-Tax, Delhi vs Aryodaya Ginning And Manufacturing Co. ... on 23 August, 1956

Southern Roadways Ltd. vs Commissioner Of Income-Tax, Tamil ... on 16 December, 1980

62. We are of the opinion that this decision cannot be of any assistance whatever to the assessee-company in the present case. In the first place, that decision was rendered obviously on an application for a direction to the Tribunal to refer the case to the High Court and, therefore, the decision itself does not refer to the facts of the case. Secondly, the court distinguished its earlier decision in CIT v. Aryodaya Ginning and Manufacturing Co. Ltd. [1957] 31 ITR 145 (Bom) only on the ground that no amount whatsoever had been set apart even for dividend reserve and that actually except for a bare recommendation in the directors' report for declaration of dividend, no amount was set apart for payment of the said amount. However, the facts of the present case are different. As we have pointed out already, in their report dated September 1, 1969, the directors actually recommended the distribution of dividend in a sum of Rs. 18,64,065 and the fact that this amount was mentioned only in the directors' report and not in the balance-sheet will not affect the position.
Madras High Court Cites 46 - Cited by 14 - V Ramaswami - Full Document

Southern Roadways Ltd. vs Commissioner Of Income-Tax, Tamil ... on 16 December, 1980

We are of the opinion that this decision cannot be of any assistance whatever to the assessee-company in the present case. In the first place, that decision was rendered obviously on an application for a direction to the Tribunal to refer the case to the High Court and, therefore, the decision itself does not refer to the facts of the case. Secondly, the court distinguished its earlier decision in CIT v. Aryodaya Ginning and Manufacturing Co. Ltd. [1957] 31 ITR 45 (Bom) only on the ground that no amount whatsoever had been set apart even for dividend reserve and that actually except for a bare recommendation in the directors' report for declaration of dividend, no amount was set apart for payment of the said amount. However, the facts of the present case are different. As we have pointed out already, in their report dated September 1, 1969, the directors actually recommended the distribution of dividend in a sum of Rs. 18,64,065 and the fact that this amount was mentioned only in the directors' report and not in the balance-sheet will not affect the position.
Madras High Court Cites 40 - Cited by 0 - V Ramaswami - Full Document

The Commissioner Of Income-Tax And ... vs The Vasantha Mills Limited on 20 March, 1957

In Commissioner of Income-tax v. Aryodaya Ginning and Manufacturing Company, Limited 1957 I.T.R. 145, the chargeable accounting period was from 1st January, 1949 to 31st March, 1949. The year of account ended on 31st December, 1948. The balance-sheet of the company as on 31st December, 1948, showed an appropriation of a sum of Rs. 11,08,000 to the Reserve Fund and a sum of Rs. 1,50,000 to the Divisional Reserve Fund. That it was only the shareholders of the company that had the authority to effect the appropriation appears to have been accepted by both sides. In that case the meeting of the shareholders at which these appropriations were approved of was on 27th June, 1949. The learned Judges held that the amounts transferred to the Reserve Fund must be taken into account in computing the capital of the company for the chargeable accounting period in question 1st January to 31st March, 1949.
Madras High Court Cites 11 - Cited by 29 - Full Document

Commissioner Of Income-Tax And ... vs Vasantha Mills Limited. on 20 March, 1957

In commissioner of Income-tax v. Aryodaya Ginning and Manufacturing Company Limited, the chargeable accounting period was from 1st January, 1949, to 31st March, 1949. The year of account ended on 31st December, 1948. The balance sheet of the company as on 31st December, 1948, showed an appropriation of a sum of Rs. 11,08,000 to the reserve fund and a sum of Rs. 1,50,000 to the dividend reserve fund. That it was only the shareholders of the company that had the authority to effect the appropriation appears to have been accepted by both sides. In that case the meeting of the shareholders at which these appropriations were approved of was on 27th June, 1949.
Madras High Court Cites 12 - Cited by 0 - Full Document

Commissioner Of Income-Tax, Gujarat-I vs Mafatlal Chandulal & Co. Ltd And Anr. on 28 June, 1976

The significance of this decision in Aryodaya Ginning and Mfg. Co. Ltd.'s case [1957] 31 ITR 145 (Bom) is that it was approved by the Supreme Court in Commissioner of Income-tax v. Mysore Electrical Industries Ltd. [1971] 80 ITR 566 (SC). It is, therefore, in the light of these different decisions of the Supreme Court having a direct bearing on the Acts of 1947 and 1964, that we will have to consider the question arising for our decision in the instant case.
Gujarat High Court Cites 48 - Cited by 13 - Full Document

Oswal Cotton Spinning And Weaving Mills vs Commissioner Of Income-Tax on 22 November, 1978

There is no quarrel about the principles of law laid down by their Lordships of the Supreme Court, but the facts of the present case are distinguishable from that of the Supreme Court case in CIT v. Mysore Electrical Industries Ltd. [1971] 80 ITR 566, the Bombay High Court case in CIT v. Aryodaya Ginning and Mfg. Co. Ltd. [1957] 31 ITR 145 as well as the Madras High Court case in CIT v. Vasantha Mills Ltd. [1957] 32 ITR 237.
Punjab-Haryana High Court Cites 18 - Cited by 5 - Full Document

Mysore Electrical Industries Ltd. vs Commissioner Of Surtax on 28 October, 1969

10. The appropriations were made by the board of directors out of the profits for the year ending March 31, 1963. The balance-sheet was passed by the general body of the shareholders. The appropriations shown under the different heads in the balance-sheet of the assessee-company are as on March 31, 1963, It is not possible for the board of the directors of any company to make the appropriations out of the profits of any year before the close of the year of accounting. The Explanation to rule 1 states that any amount standing to the credit of any account in the books of a company as on the first day of a previous year relevant to the assessment year which is of the nature referred to therein shall not be regarded as a reserve. It follows from the language of the Explanation to the rule that the amounts in the nature of reserves standing to the credit of any account in the books of the company as on the first day of the previous year relevant to the assessment year shall be regarded as reserve for the purpose of computation of the capital of the company. In the account books of the assessee-company also in the balance-sheet as on the first day of the previous year relevant to the assessment year, i.e. on April 1, 1963, the sums referred to in questions Nos. 1 to 3 have been credited to the account of, (a) plant modernisation and rehabilitation reserve, (b) loan redemption reserve, and (c) development rebate reserve, Though the board of directors in their report to the shareholders made the appropriations after April 1, 1963, the said appropriations, in our view, are effective from April 1, 1963, We are in respectful agreement with the view of the law in the decision of the Bombay High Court in Commissioner of Income-tax v. Aryodaya Ginning and Manufacturing Co. Ltd. Therefore, question Nos. 1 to 3 have to be answered in the negative and in favour of the assessee. We accordingly answer question Nos. 1 to 3 in favour of the assess and questions Nos. 4 to 6 in favour of the revenue. In the circumstances, the parties are directed to bear their own costs.
Karnataka High Court Cites 9 - Cited by 7 - Full Document

Commissioner Of Income-Tax, Bombay ... vs Otis Elevator Co. (India) Ltd. on 26 March, 1976

9. In the first place, the Explanation to rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 (which we have quoted above), on which reliance has been placed by him, would, strictly speaking, be inapplicable to the facts of the present case. All that the said Explanation says is that "for the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company", as on the relevant date, "is of the nature of item (5) or item (6) or item (7) under the heading 'Reserves and Surplus' or of any item under the heading 'Current liabilities and provisions' in the column relating to 'Liabilities' in the 'Form of balance-sheet' given in Part I of Schedule VI to the Companies Act, 1956, shall not be regarded as a reserve for the purposes of computation of the capital of a company under the provisions of this Schedule". In other words, in order that the Explanation should apply, it must be shown that in the balance-sheet of the company for the relevant period certain items falling under the heading "Current liabilities and provisions" must have been shown in the column relating to "Liabilities" in the "Form of balance-sheet" or the item must be of a nature of item (5), or item (6) or item (7) falling under the heading "Reserves an surplus", while in the instant case the item of Rs. 53,330.55 does not appear in the column of liabilities at all in the balance-sheet for the relevant year but it occurs under the heading "Reserves and surplus" and as such the question of applying the Explanation to the facts of the present case would not arise. It may be stated at this stage that it was nobody's case that the balance-sheet of the assessee-company for the relevant period in the instant case has not been properly prepared in accordance with the provisions of the Companies Act. That being not the case of either party, the question will have to be considered as to whether this particular item which has been shown under the heading "Reserves and surplus" could be treated in the manner suggested by Mr. Joshi by relying upon the Explanation to rule 1 of Schedule II to the Companies (Profits) Surtax Act, 1964. Since this is not an item of the nature of item (5) or item (6) or item (7) under the heading "Reserves and surplus" nor is it any of the items appearing under the heading "Current liabilities and provisions" in the column relating to "liabilities" in the from of balance-sheet given in Part I of Schedule VI to the Companies Act, 1956, the Explanation could not be applicable thereto. But apart from this technical approach, looking at the item from the point of substance, the question would be whether this item could be regarded as a provision or a reserve and having regard to the distinction that has been made between these two concepts by the Supreme Court in Metal Box Co.'s case it is clear that if an amount is set aside out of the profits and other surplus to provide for any known liability, it would be a provision but if an amount is set aside out of the profits or other surplus is not designed to meet a liability, contingency, commitment or diminution in value of assets known to exist at the date of the balance-sheet it is a reserve. Even the two definitions of the expressions "provision" and "reserve" as given in clause 7(1)(a) and (b) respectively of Part III of Schedule VI to the Companies Act bear out this distinction. having regard to the definitions given therein it would be clear that if any amount is retained by way of providing for any known or existing liability-known or existing at the date of the balance-sheet-it would be a provision, whereas any retention of money which is not designed by way of providing for any known liability would be a reserve. Looked at from this angle, in our view, the setting apart of item of Rs. 53,330.55 by way of providing for employees' indemnities intended to be spent for payment of retrenchment compensation arising out of a future or possible retrenchment of any member of the staff cannot be regarded as a provision made for any known or existing liability and, therefore, the setting apart of this item will have to be regarded as a reserve which would be properly includible in the capital computation for surtax purpose.
Bombay High Court Cites 8 - Cited by 18 - V D Tulzapurkar - Full Document

Commissioner Of Income-Tax, Bombay ... vs Blundell Eomite Paints Ltd. on 29 August, 1981

4. Admittedly, the said amount of Rs. 4,00,000 was included in the balance-sheet of the assessee-company as at June 30, 1963, in the opening balance as on July 1, 1962, of the general reserve of Rs. 17,00,000. The ITO under his surtax assessment order dated on February 7, 1968, excluded the said sum of Rs. 4,00,000 from the computation of capital as on July 1, 1962, on the ground that the necessary appropriation to the reserve was made after July 1, 1962, that is, by a resolution passed at the annual general meeting held on December 27, 1962. The AAC by his order dated September 7, 1968, sustained the said view. The Income-tax Appellate Tribunal, however by its order dated on September 26, 1970, following the view expressed by this court inthecases of CIT v. Aryodaya Ginning and Manufacturing Co. Ltd. [1957] 31 ITR 145, held that for the purpose of surtax the said amount of general reserve of Rs. 40,00,000 along with the earlier general reserve of Rs. 13,00,000 was to be included in the capital as on 1st July, 1962.
Bombay High Court Cites 12 - Cited by 1 - Full Document
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