Shaw Wallace and Co. Ltd. Vs Commissioner of Income Tax

1. In this reference u/s 256(1) of the I.T. Act, 1961, the following question has been referred to this court:

" Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that goodwill amounting to Rs. 39,63,686 written off in 1956, investment reserve amounting to Rs. 16 lakhs written off in 1961 and investments totalling Rs. 20 lakhs written off in the year 1957 to 1961 which did not appear in the balance-sheets of the years immediately preceding the previous years corresponding to the relevant assessment years could not be included in the capital computation for the purpose of working out the liability under the Super Profits Tax Act, 1963, and the Companies (Profits) Surtax Act, 1964 ? "

2. We may mention that before us no argument regarding investment reserve amounting to Rs. 16 lakhs written off and investments totalling Rs. 20 lakhs written off in the years 1957 to 1961 which did not appear in the balance-sheets for the previous years was placed and as such we did not have the advantage of considering the submissions on behalf of the parties in respect of the same. We, therefore, decline to deal with these aspects and would not answer the question relating to these two items.

3. The assessee is a limited company and this reference relates to the assessment years 1963-64, 1964-65 and 1965-66. The assessee claimed before the ITO that in working out the super profits tax liability for the assessment year 1963-64 and the surtax liability for the assessment years 1964-65 and 1965-66, the goodwill amounting to Rs. 39,63,686, written off in the accounts for the year ending on 31st December, 1956, should be included in the capital computation. The ITO, however, did not accept the claim of the assessee-company. It would be relevant to refer to certain portions of the order of the ITO, wherein he, dealing with those two items, inter alia, observed as follows:

" The balance-sheet of the company for the year does not show the existence of such reserves. There is no provision in the Act for considering such items as reserves for the purpose of computation of capital. The assessee''s contention, that these amounts are to be included in the computation of capital, as other reserves, is, therefore, rejected."

4. Being aggrieved by the said order of the ITO, the assessee went up in appeal before the AAC. The AAC, while, however, giving relief on some other points, agreed on these aspects with the ITO. He observed, inter alia, as follows :

" 5. Rules for computing the capital of a company for the purposes of super profits tax have been given in the Second Schedule. As per the Second Schedule the capital of a company shall be the sum of the amounts as on the first day of the previous year relevant to the assessment year, of its paid up share capital and of its reserves, if any, created under various provisions of the Indian I.T. Act and of its other reserves in so far as the amounts credited to such other reserves have not been allowed in computing its profits for the purposes of the Act. Thus, computation of capital has to be done on the basis of the figures given in the balance-sheet. The goodwill of Rs. 40 lakhs was written off in 1956. Certain investments were also written off between 1956 to 1961. The amounts so written off have already reduced the balances standing to the credit of general reserves. However, these two sums cannot be taken into account for the purposes of the computation of capital in view of the Second Schedule referred to above."

5. The assessee went up in appeal before the Tribunal and the Tribunal was of the view that Revenue authorities rightly did not accept the claim of the assessee-company that the goodwill written off should be included in the capital computation. The Tribunal observed, inter alia, as follows:

" In this connection it is necessary to refer to Section 211 of the Companies Act which clarifies and lays down that except in the case of insurance companies or banking companies or companies engaged in the generation or supply of electricity or to any other class of companies for which a separate form of balance-sheet has been specified under the Act governing such class of companies, every balance-sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year to which it relates. It is not the case of the assessee-company that it is an insurance company or a banking company or a company engaged in the generation or supply of electricity or any other class of companies which are governed by an Act governing such class of companies. It, therefore, follows that the state of affairs reflected by the balance-sheet of the assessee-company must be a true and fair view of the state of affairs as at the end of the year to which it relates. It automatically follows, therefore, that if the assessee claims that the value of the assets as shown in the balance-sheet was not a true value of the assets, the onus was on the assessee to prove the claim which in the instant case has not been done. On the other hand, we find from Schedule ''G'' of the balance-sheet of the assessee-company as on 31st December, 1961, i.e., after the write-off of the investment reserve and investments written off, that the value of the quoted investments according to the market value was Rs. 95,37,444 and according to the book value was Rs. 94,01,389, which clearly goes to show that the book value of the assets shown in the balance-sheet was almost the same as the market value. It has also not been shown to us in spite of the contentions of the learned departmental representative that at the stage in the course of proceedings for wealth-tax for the year in which wealth-tax was imposable the assessee-company had offered what it claimed to be secret reserves as an asset of the assessee-company for the assessment to wealth-tax that this was not so. The Expln. 1 to Rule 1 of the Second Schedule to the Super Profits Tax Act, 1963, and similarly the Explanation to Rule 2 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, have laid down that a paid-up share capital or reserve brought into existence by creation or increase (by revaluation or otherwise) of a bank asset is not capital for the purpose of capital computation under the Super Profits Tax Act, 1963. It follows, therefore, that if by the under valuation of any asset any reserve is wiped out or reduced, this again will not be considered for the purpose of capital computation under both the Acts and the Expln. 1, therefore, instead of helping the assessee''s case, goes against the assessee-company. Another aspect of the case which has to be considered is that if the various debits to the profit and loss account for writing off of goodwill or investments written off amounting to Rs. 39,63,686 and Rs. 20,00,000 respectively had not been made, that would have only increased the balance to the credit of the profit and loss account and this could not be included in the capital computation in view of the rulings of the Hon''ble Supreme Court in the case of Commissioner of Income Tax, Bombay City Vs. The Century Spinning and Manufacturing Co. Ltd., , under the Super Profits Tax Act, 1963, and both in view of the ruling of the Hon''ble Supreme Court in the case of Century Spinning and Manufacturing Co. Ltd. and the Explanation to Rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964. Here, it will be necessary to point out that even the Explanation to Rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, is for the removal of doubts as mentioned in the opening words of the Explanation itself and, therefore, this Explanation has only clarified what was understood to be the law before and, in these circumstances, even in the absence of the Explanation, the credit to the profit and loss account could not be included in the capital computation. It is not for us to go into the realm of conjectures and surmises of what would have been done by the directors with the profit and loss account surplus and we have to take accounts as they stand. Taking all these facts into consideration we are of the view that the Revenue authorities rightly did not accept the claim of the assessee-company that the goodwill written off, investment written off and investment reserve written off should be included in the capital computation. The order of the AAC on the point, therefore, appears to be correct and is confirmed. "

6. Upon these, the question as indicated above, has been referred to this court.

7. The main contention urged on behalf of the assessee, before us, was that in this case indisputably the company had acquired goodwill on payment of certain sums of money amounting to Rs. 39 lakhs. It was not a case of the company generating its own goodwill or building up its own reputation year by year. It was further contended that it was nobody''s case that the company had suffered such loss of reputation or had lost its goodwill. It was, therefore, submitted that the goodwill, as an asset, when it was shown in the previous year, was there, and a value was given to that asset. That value was written off but the value of that asset remained in the company''s accounts and that account was available to the company in the profit and loss account. Therefore, it was submitted that it was a kind of a secret reserve available to the company for the purpose of future use for the company for any contingency or for any particular use. In that background, it was submitted that this item should be included in the computation of capital by the well-settled principles which had been laid down by different courts, and in the books of accountancy in determining how "reserve'''' and "provision" should be computed. In this connection it was urged that under the C. (P.) S. T. Act, 1964, what was required by the Second Schedule was that " subject to the other provisions contained in this Schedule, the capital of a company shall be the aggregate of the amounts, as on the first day of the previous year relevant to the assessment year, of--(iii) its other reserves as reduced by the amounts credited to such reserves as have been allowed as a deduction in computing the income of the company for the purposes of the Indian Income Tax Act, 1922, or the Income Tax Act, 1961 ".

8. It was submitted and, in our opinion, rightly that in order to merit consideration as " reserve " it was not required by the provisions of the said Act that such reserve should appear in the balance-sheet, as such. In this connection, a contrast was made with Section 7(2) of the W.T. Act which specifically referred to the balance-sheet for certain purposes in the computation of wealth. Therefore, the fact that the amount or the value of goodwill was not appearing in the balance-sheet as "reserve" or as the value of the goodwill would not disentitle the assessee, it was urged, for claiming that the amount should be available for its computation of capital under the said Act if the same was available to the company. To this extent, in our opinion, learned advocate for the assessee was right. Our attention was drawn to the principles laid down by the Supreme Court in the case of Vazir Sultan Tobacco Co. Ltd., Hyderabad and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad, , where the Supreme Court had occasion to consider the question how "reserve" and "provision" should be differentiated or treated. The Supreme Court, however, there, was not concerned with the question whether there could, in a particular case, be a secret reserve which was not apparent from the balance-sheet. The Supreme Court, there, went on to observe that the expression " reserve " had not been defined in the S.P.T. Act, 1963, or the C. (P.)S. T. Act, 1964. The dictionaries, according to the Supreme Court, did not make any distinction between the two concepts " reserve " and " provision " while giving their primary meanings whereas in the context of those Acts a clear distinction between the two was implied. Though the expression "reserve" was not defined, according to the Supreme Court, since it occurred in the taxing statutes applicable to companies only and to no other assessable entities, the Supreme Court was of the view that the expression had to be understood in its popular sense, viz., in the sense or meaning that was attributed to it by men of business, trade and commerce and by persons interested in or dealing with companies. Therefore, according to the Supreme Court, the meaning attached to the words "reserve" and "provision" in the Companies Act, 1956 dealing with the preparation of the balance-sheet and the profit and loss account would govern their construction for the purpose of the two enactments. The broad distinction between these two was that whereas " provision " was a charge against profits to be taken into account against gross receipts in the profit and loss account, a " reserve " was an appropriation of the profits, the asset or assets by which it was represented being retained to form a part of the capital employed in the business. In this context, the Supreme Court followed the principle laid down by the Supreme Court in the case of Metal Box Company of India Ltd. Vs. Their Workmen, . The Supreme Court further observed that though the term " provision " was defined in Clause 7 of Pt. III, Schedule VI to the Companies Act, 1956, positively by specifying what it meant, the definition of "reserve" was negative in form and not exhaustive in the sense that it only specified certain amounts which were not to be included in the term " reserve ". The effect of reading the two definitions together, according to the Supreme Court, was that, if any retention or appropriation of a sum fell within the definition of "provision" then the same could never be a " reserve ", but it did not follow that if the retention or appropriation was not a " provision " it was automatically a " reserve " and the question would have to be decided having regard to the true nature and character of the sums so retained or appropriated depending on several factors including the intention with which and the purpose for which such retention or appropriation had been made because the substance of the matter had to be regarded and it was in this context the primary dictionary meaning of the term " reserve " might have to be availed of. If any retention or appropriation of a sum was not a " provision ", that is to say, it was not designed to meet depreciation, renewal or diminution in the value of assets or any known liability, the same was not necessarily a " reserve ". The question whether the concerned amount constituted a " reserve " or not would have to be decided by having regard to the true nature and character of the sums so appropriated, depending on the surrounding circumstances, particularly the intention with which and the purpose for which such appropriation had been made. The true nature and character of the appropriation must be determined with reference to the substance of the matter. This meant that one must have regard to the intention with which and the purpose for which such appropriation had been made, such intention and the purpose being gathered from the surrounding circumstances. The following aspects provided some guidelines, viz., (a) a mass of undistributed profits could not automatically become a reserve and somebody possessing the requisite authority must clearly indicate that a portion thereof had been earmarked or separated from the general mass of profits with a view to constituting it either a general reserve or a specific reserve, (b) the surrounding circumstances should make it apparent that the amount so earmarked or set apart was, in fact, a reserve to be utilised in future for a specific purpose and on a specific occasion, and (c) a clear conduct on the part of the directors in setting apart a sum from out of the mass of undistributed profits avowedly for the purpose of distribution as dividend in the same year would run counter to any intention of making that amount a reserve. The Supreme Court, in this connection, followed the principles laid down in the case of Commissioner of Income Tax, Bombay City Vs. The Century Spinning and Manufacturing Co. Ltd., . The Supreme Court further observed that an amount set apart by the board of directors of a company for liability to taxation in respect of the profits which had earned during the year would have to be regarded as provision for a known and existing liability the quantification whereof had to be done later. It was, therefore, a "provision " and could not be regarded as a "reserve". The Supreme Court referred to the decision in the case of Kesoram Industries and Cotton Mills Ltd. Vs. Commissioner of Wealth Tax, (Central) Calcutta, . There the Supreme Court referred to Section 217 of the Companies Act, 1956, and regln. 87 of Table A in Schedule I to that Act, which, according to the Supreme Court, read together, clearly showed that creating reserves out of the profits was a stage distinct in point of fact and anterior in point of time to the stage of making a recommendation for the payment of dividend and the scheme of the provisions suggested that an appropriation made by the board of directors by way of recommending payment of dividend cannot, in the nature of things, be a reserve. Appropriation made by the directors for the proposed dividend do not constitute " reserves " and the concerned amounts so set apart would have to be ignored or excluded from the capital computation. Then the Supreme Court dealt with the actual appropriation of certain amount with which we are not concerned in the instant reference before us. Therefore, it is not necessary to refer to the said portion of the decision of the Supreme Court. As has been mentioned, if a sum has been set apart then it must be judged in substance in order to constitute reserve depending on the true nature and character of the sums so appropriated and depending on the surrounding circumstances. The true nature of the appropriation must be determined with reference to the substance of the matter and one of the main guidelines was that somebody capable of deciding for the company, must have decided to keep the sum apart for future use of the company.

9. In the instant case before us, we were taken through the balance-sheet and the P & L a/c for the year ended 31st December, 1956, as also the profit and loss a/c and balance-sheets for the relevant years. Some of the balance-sheets are part of the paper book before us. It is true that goodwill valued at Rs. 39,63,686 was written off and transferred to the P & L a/c. It is also true that in the subsequent balance-sheet this amount appeared in the P&L a/c. But there are one or two difficulties in accepting the assessee''s contention. Firstly, the expression " written off " is not clear on the true intention of the persons capable of deciding for the company, as to what purpose this amount was being written off and transferred to the P&L a/c. It is true, as was contended on behalf of the assessee, that it was not a reasonable view to take that the company had lost its goodwill and that was why the goodwill was written off. Even assuming that the company had the goodwill and the value of it did not depreciate but remained the same, the purpose of transferring the value of the tangible assets to the P&L a/c and keeping it for the purpose of user in the future is not manifest. No inference can be drawn from the fact that this sum was available for future use and/or was kept for the purpose of future use by the company. If that is not there, then looking at the substance of the matter, in our opinion, on the basis of the principles laid down by the Supreme Court, it is difficult to accept that this sum was treated or kept for user in future by the board of directors or by the persons who were capable of making decision on behalf of the company and as such entitled to be taken into the capital computation on the relevant date. No evidence was adduced before the Tribunal and the Tribunal noted that this sum was available to the company in the relevant year for the purpose of its use. Furthermore, the Tribunal has noted that in the return for the wealth-tax, the assessee had not disclosed this amount representing the value of the goodwill as an asset. If the assessee had retained this amount in the year under question for the purpose of being available to it for user in future, then this sum would have found its place in the wealth-tax return of the assessee or some evidence would have been available that this sum was available in the books of account or in the P&L a/c of the assessee in the year in question. Prima facie the Tribunal is right that the balance-sheet must be taken as true and correct. But as we have observed, if it is demonstrated otherwise, either by the production of the books of account or the P&L a/c of the company, that the amount so kept apart was available to the company, then even without any reference in the balance-sheet, that sum, if it is otherwise available for future use, can be considered to be a reserve on the basis of the principles laid down by the Supreme Court, to be taken into account in the computation of the capital. The balance-sheet is an important factor, but may not be a conclusive or decisive factor. Our attention was drawn to several books on accountancy in aid of the proposition that a secret reserve was possible and writing off the goodwill was one of the modes or methods of creating a secret reserve. In this connection, our attention was drawn to Spicer & Pegler''s Practical Auditing, p. 404; Pickles Accountancy, 4th edn., p. 1719, Spicer and Pegler''s Book-keeping and Accounts, 17th edn., p. 68, where the author has defined the term "secret reserves" and has observed that the term "secret reserves " was used to denote reserves which existed but were not disclosed on the face of the balance-sheet and one of the modes of creating a secret reserve, according to the author, was omitting goodwill from the accounts. So there must be evidence that the reserves existed in fact but were not disclosed in the balance-sheet. Therefore, the existence of a reserve or the amount of money claimed to be a reserve must be proved in each particular case which, unfortunately, in this case, in the situation noted by the Tribunal and the ITO and the AAC, are not evident before us and it was the assessee, who was claiming this amount to be so included, who has to prove them. We may also observe that according to one view--view of Frank H. Jones in his book Guide to Company Balance-Sheets and Profit & Loss Account, 8th edn., p. 150, goodwill was normally disposable only when the business as a whole was sold. The author noted, apart from nationalisation or the absorption of a company in a group, this eventuality was improbable except in the event of financial crisis, when the asset would have little or no value. It may be argued from one point of view that goodwill is an intangible asset, the value of which could never form part of a reserve in the sense that the value or the sum represented by the goodwill would be available to the company for the future purpose of its business, because, so long as the company is a going concern, and is existing, its goodwill has a value and that sum would not be available to the company for the purpose of its user. But it is not necessary for us to actually decide this aspect of the matter.

10. Reliance was placed on behalf of the assessee on a decision of the Chancery Division in the case of Stapley v. Read Brothers Ltd. [1924] 2 Ch D 1 (Ch D). There, the company which applied its profits in writing off a corresponding amount of the value of the goodwill, instead of carrying them to a goodwill depreciation reserve fund, but which was not finally and unreservedly, capitalized those profits, it was held that it might write back to profit account so much of the depreciation written off as proved to be in excess of the proper requirements. There Mr. Justice Russell noted that :

"Goodwill had since 1918 been eliminated from the balance-sheet by writing it off against the reserve fund, that is to say, goodwill disappeared from the assets side and on the liability side the reserve fund was proportionally reduced. The company still owned the asset, whatever its true value might be, but, for the purpose of its accounts, treated that asset as of no value."

11. Before the learned judge it was admitted that as the honest value of the goodwill at the relevant time was at least �40,000 and there was �140,000 to the credit of such reserve, they could have distributed �40,000 of the reserve fund as profits. The learned judge posed the question : did it make any difference that they have kept their accounts in another form, and that instead of placing the profits to a reserve account, they had purported to apply them in writing off a corresponding amount of the value of the goodwill ? The answer seemed to the learned judge to depend upon the further question, namely, have the company finally and irrevocably capitalized those profits, so as to disentitle themselves for ever afterwards from restoring them to reserve and from dealing with them as profits ? No doubt, the accounts showing the particular methods adopted were approved every year by the shareholders in general meeting, but the learned judge was not satisfied that the shareholders thereby intended, or bound themselves, for all time and in all circumstances to give up their claims to these profits and to treat them as capital only. The learned judge observed that unless there was anything in the Companies (Consolidation) Act, 1908, or in the constitution of the company to prohibit it, the shareholders might, if they thought fit, write back to profit account so much of the depreciation written off goodwill as had proved to have been in excess of proper requirements. There, the learned judge found this was shown in that case to be a sum of not less than �40,000. The learned judge''s decision proceeded on the basis that it was shown that there was this asset and, therefore, there was this value. This case was discussed in the book Guide to Company Balance-Sheets and Profit & Loss Account by Mr. Frank H. Jones as we have mentioned hereinafter. After setting out the facts the author noted that Mr. Justice Russell in refusing the injunction expressed the view that the P & L a/c need not be treated as a continuous account in such a manner that no dividend can be declared out of one year''s profits until any debit to profit and loss in respect of prior years is made good. If �40,000 had been carried to reserve it could have been subsequently distributed as dividend. It made no difference that the company instead of carrying the sum to reserve had utilised it to write down goodwill. The shareholders had approved the directors'' previous report and the proposal but they had not bound themselves to give up their claims to the profits that had been carried to reserve and employed to write off goodwill. In brief, these profits had not been permanently capitalised. The principle laid down in that decision would not be applicable to the present case and specially in view of the particular controversy, that is to say, how a reserve has got to be considered in the background of the present case. In that case before the Chancery Division the learned judge noted that the factual existence of the amount available to the company was not in dispute. Here the factual existence of a sum of Rs. 39,63,686 which was representing the value of the goodwill has not been established to our satisfaction by the fact-finding authorities in the relevant year in question.

12. Our attention was also drawn to the decision of the Bombay High Court in the case of Commissioner of Income Tax, Bombay City-III Vs. Bank of India, . There, for the assessment year 1963-64 (previous year ending on 31st December, 1962) the assessee banking company computed its capital for the purpose of calculating super profits tax and in doing so it took into consideration the amount standing to the credit of premium and discount account which was shown in its books of account but not in its balance-sheet. The learned judge first noted that though the amount of Rs. 76,58,687 did not figure in the published balance-sheet, yet this sum was demonstrated to the satisfaction of the court and was found as a fact being available in the books of account of the company. In that background it was held that the amount represented secret reserve in the light of the definition enunciated by the different courts. The learned judge noted at p. 236 of the report that in fact, the existence of the secret reserves and its quantum had not been disputed at any stage in that case. The ITO as well as the AAC had proceed on the basis that a definite amount of Rs. 76,58,687 was maintained by the assessee-company as secret reserve. In that background and also by considering the book value of the company and its books of account the learned judges found that it was apparent that the book value of the assets as shown was far below the current market value. Even in this background and these findings of fact, the learned judges observed as follows (p. 237):

"Coming to the balance-sheet in question, item 4 in the balance-sheet is an entry under the head '' Investments at below market value''. The wording of the heading of the said item is itself eloquent and an intelligent reader can at once gather from the said entry that the said investments have been valued at below the market value for the obvious purpose of creating secret reserves. As has been pointed out earlier, in the books of account the mode by which the said figure of Rs. 76,58,687 has been shown to have been arrived at is by working out the difference between the market value of the securities and shares which is shown as Rs. 23,00,71,555.37 and the market value of the investments which is shown as Rs. 22,24,12,868.18 (which is the figure which is shown as the total value of the items mentioned in the said Entry No. 4). The figure of Rs. 76,58,687.19 is shown in the books of account as standing to the credit of the account which is called the premium and discount account. This figure, as stated earlier, reflects the balance after the sale of shares and securities. It is because the assessee-company has stated the amount standing to the credit of the said account, that the company is impelled to show the value of its total investments in securities and shares less by the said amount. That is the purpose and the role which this amount, which is otherwise called secret reserves, serves in the balance of the accounts of the company as reflected in the published balance-sheets and the profit and loss accounts.

Thus, it is more than clear, firstly, that the amount is appropriated for the said reserve account by a deliberate action, and, secondly, it is so done by the power of the board of directors, which is the requisite authority under the articles of association of the company. Both the conditions laid down by the Supreme Court in Commissioner of Income Tax, Bombay City Vs. The Century Spinning and Manufacturing Co. Ltd., , for an appropriation of funds to the reserve accounts are, therefore, fully satisfied in the present case. The said amount will, therefore, be entitled to be called '' reserves '' notwithstanding that it is not in so many figures reflected in the profit and loss account or the published balance-sheet. Hence, it will have to be counted in the capital base of the company for the purpose of Rule 1 of Schedule II of the Super Profits Tax Act, "

13. As mentioned hereinbefore, the learned judges proceeded on the basis that the existence of the secret reserve and the quantum thereof were not disputed in the case before the learned judges. Now, in this case this position is not the same. Here, certain amount, as we have indicated, was written off and transferred to the P & L a/c. It has not been demonstrated that this profit and loss account was earmarked for any particular purpose ; nor has it been demonstrated that the entirety of the amount that has been written off has been kept intact in that year, with which we are concerned in this reference. In this background, in our opinion, the principles enunciated by the decision in the Division Bench of the Bombay High Court cannot be applied to the facts of the instant case.

14. Our attention was drawn to a decision of this court in the case of Commissioner of Income Tax Vs. Kinnison Jute Mills Co. Ltd., , but in view of the facts in the instant case that decision is not of much assistance to us. Our attention was also drawn to certain observations made in the case of Commissioner of Income Tax Vs. Sankey Electrical Stampings Ltd., and reliance was placed on the observation at p. 554 : " We must try as far as practicable, having regard to the reality of the situation, to judge the situation, as far as possible, at the beginning of the relevant accounting year. " This proposition is also disputed and not applicable for our present purpose.

15. In that view of the matter, we are of the opinion, that the Tribunal, in the facts and circumstances of the case, came to a correct conclusion and we answer the same by holding that the Appellate Tribunal is right in holding that the goodwill amounting to Rs. 39,63,686, written off in 1956, could not be included in the capital computation for the purpose of working out the liability under the S.P.T. Act, 1963, and the C. (P.) S.T. Act, 1964. So far as the goodwill is concerned, we answer the question in the affirmative and in favour of the Revenue. So far as the question relating to the investment reserve amounting to Rs. 16 lakhs, written off in the year 1961, and investment totalling Rs. 20 lakhs written off in the years 1957 to 1961 are concerned, the assessee has not pressed for an answer and we, therefore, decline to answer the said question.

16. In the facts and circumstances of the case, parties will pay and bear their own costs.

17. I agree.