M/S. GEORGE WILLIAMSON (ASSAM) LTD. vs. COMMNR. OF INCOME TAX, GUWAHATI

C.A. No.-006694-006698 - 2004Supreme Court19 September 20056 pages
For Respondent: B. V. BALARAM DAS
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the capital reserve was to be treated as part of the company's capital for surtax purposes. It reasoned that the reserve was not created by increasing book assets but arose from the difference between real assets and the consideration paid, as per accounting principles.

What were the facts?

M/s George Williamson (Assam) Ltd. acquired Indian undertakings of sterling tea companies for Rs. 490 lakhs. A capital reserve of Rs. 1,43,89,055 arose due to the difference between the net assets and the approved consideration. The issue was whether this reserve should be included in the company's capital for surtax assessment.

What were the issues?

Whether a capital reserve arising from the difference between the net assets of acquired undertakings and the approved consideration is includible in the company's capital for surtax assessment, particularly in light of Explanation 1 to Rule 2 of the Second Schedule.

Which sections of the Income-tax Act were involved?

Companies (Profits) Surtax Act, 1964, Second Schedule, Rule 2, Explanation 1

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6 CASE NO.: Appeal (civil) 6694-6698 of 2004 PETITIONER: M/s George Williamson (Assam) Ltd. RESPONDENT: Commissioner of Income Tax, Guwahati DATE OF JUDGMENT: 19/09/2005 BENCH: Dr. AR. Lakshmanan & P.P. Naolekar

JUDGMENT: J U D G M E N T Dr. AR. Lakshmanan, J.

The above appeals were filed against the judgment and order dated 17.07.2003 passed by the Division Bench of the Gauhati High Court whereby the Division Bench allowed the appeal filed by the Commissioner of Income Tax being I.T. Appeal No. 6 of 2000 and reversed the order of the appellate tribunal dated 04.04.2000. The present case involves an important question of law with regard to the interpretation of Explanation 1 to Rule 2 of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The appellant company was formed mainly for the purpose of taking over the Indian undertakings of several sterling tea companies operating in India. These sterling tea companies were registered in UK and were operating in India. The acquisition of the Indian undertakings of the sterling tea com

The order continues below.

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