Judgement

KAPUR, J. : This is an appeal against the judgment and orders of the High Court of Judicature at Bombay in Income-tax Reference 34 of 1956. The appellant is a non-resident Bank incorporated under the National Bank Act of the United States of America with its head office in that country and with branches all over the worlds including some branches in India. It was assessed under the Business Profits Tax Act (Act XXI of 1947), hereinafter termed the "Act , in respect of the chargeable accounting periods:

1-4-1946 to 24-12-1946.

25-12-1946 to 24-12-1947.

25-12-1947 to 23-12-1948, and

24-12-1948 to 31-3-1949

and the sole question for decision in this appeal is the meaning of the word "reserves in R. 2(1) of Schedule 2 of the Act and how the capital of the appellant during the above-mentioned chargeable accounting periods has to be computed for the purpose of allowing the "abatement under the Act.

2. The appellant contended that in computing the amount for the purpose of abatement, it was entitled to include what is termed in the United States "Undivided Profits , the contention being that this item falls within the word "reserves in R. 2(1) of Schedule II of the Act which