A Sinking Fund created for redemption of debentures will number be treated as Reserve even though 1 it has to be shown as Reserve in the Balance Sheet and 2 the amount kept in this fund is in the nature of allocation of profits and number a charge against them.
The High Court took the view that the amount set apart to redeem the debentures has to be treated as provision and number as reserve.
1,12,00,000.
79,00,000.
WITH C.A NOS.
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.
A perusal of the balance sheet further shows that the assessee companypany had floated an actually issued 6 1/2 per cent secured redeemable mortgage debentures, as pointed out earlier, against the security of land, buildings and machinery of the companypany and a floating charge on the undertaking.
2/95, 198/89, 432/89, 433/89 AND 2970/81 J U D G M E N T 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 companyputing the capital of the assessee Company for the purpose of Companies Profits Surtax Act, 1964.
