The Business Profits Act, 1947.
17. SCHEDULE II(See SECTION 2 (1)
Rules for computing the capital of a company for purposes
of Business Profits TaX
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For the purposes of ascertaining the abatement under this
act in respect of any chargeable accounting period, the capital of a company
shall be computed in accordance with the following rules.
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Where the company is one to which clause
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of rule 3 of Schedule I applies, its capital shall be the
sum of the amounts of its paid-up share capital and of its reserves in so far as
they have not been allowed in computing the profits of the company for the
purposes of the Indian Income-tax Act, 1922.(2) Where the company is one to
which clause
-
of rule 3 of
Schedule
I applies, its capital, ascertained in accordance with sub-rule (1) of this
rule shall be diminished by the cost to it of its investments or other property, the
income from which is not includible in the profits, so far as that cost exceeds any debt for money
borrowed by it.
(3) In all other cases, the capital shall be the sum ascertained in accordance
with the said sub- rule, diminished by the cost to the company of its
investments so far as that cost exceeds any debt for money borrowed by it.
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So much of the premium realized by a company from the issue
of any of its shares as is retained in the business shall be regarded as forming
part of its paid-up capital for the purposes of rule 2.4. Any deposits with the
Central Government under section 10 of the Indian Finance Act, 1942, or section
2 of the Excess Profits Tax Ordinance, 1943, shall not be regarded as investment
or other property for the purposes of this Schedule.
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