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Addl. Commissioner Of Income-Tax, ... vs Bharat Fritz Werner (P) Ltd. on 19 October, 1978

11. The above conclusion is further supported by the decision in Addl. CIT v. Bharat Fritz Werner (P.) Ltd. [1979] 118 ITR 25 (Kar.). The facts are similar to the facts in the present case. The assessee issued redeemable cumulative preference shares for Rs. 6 lakhs which were redeemable on 31-12-1970, or earlier, at the option of the assessee. The assessee created preference share capital redemption reserve. The assessee claimed before the ITO that the reserve should be considered while determining the capital base. The ITO rejected the claim of the assessee but, however, the AAC accepted the same and the finding of the AAC was confirmed by the Tribunal. The Commissioner, Mysore, was in reference and the Hon'ble High Court accepted the claim of the assessee. The assessee in the present case had only created the reserve against the debenture stock, whereas in the above case the reserve was created against the preference share capital and, therefore, even the above case supports the plea of the assessee.
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