Judgment

MITTER, J.: - The question involved in this appeal is, whether three several sums appropriated by the Directors of the respondent towards reserves on the 8th August 1963 out of the profits of the year ending 31st March, 1963 should be added to other items for computation of the capital of the respondent as on the 1st day of (Tax Referred Case No. 12 of 1967, D/28-10-1969 - Mys.) April, 1963 in terms of Rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 hereinafter referred to as the Act .

2. The Act which received the assent of the President on 2nd May, 1964 is an Act to impose a special tax on the profits of certain companies. Under Section 4 of the Act a tax known as surtax became chargeable on every company for every assessment year commencing on and from the 1st day of April, 1964 in respect of so much of its chargeable profits of the previous year as exceeded the statutory deduction, at the rates specified in the Third Schedule, Under Section 2 (3) "assessment year" means the period of twelve months commencing on the 1st day of April of every year. "Chargeable profits" is defined in Section 2 (5) as the total income of an assess computed under th