JUDGMENT

Sen. J.-The point that falls for determination in this case is whether a sum of Rs. 79 lakhs representing Debenture Redemption Reserve was includible in computing the capital of the assessee-Company for the purpose of Companies (Profits) Surtax Act, 1964 2. The High Court took the view that the amount set apart to redeem the debentures has to be treated as provision and not as reserve . The facts stated by the High Court in this regard are as follows :

"From the balance-sheets for the said periods, we find that in the calendar year 1965, the development rebate reserve was Rs. 79,00,000. However, in the next calendar year 1966 which is relevant to the assessment year 1967-68, the figure of debenture redemption reserve has gone up to Rs. 1,12,00,000. A perusal of the balance-sheet further shows that the assessee company had floated and actually issued 6½ per cent secured redeemable mortgage debentures, as pointed out earlier, against the security of land, buildings and machinery of the company and a floating charge on the undertaking. None of these debentures appear to have been redeemed during the relevant previous years. There is no disput