Judgment :- RAMANUJAM, J. The dispute in this case is with regard to the treatment to the given to certain development rebate reserves in computing the capital of the company as on 1st July, 1961, the first day of the previous year ended 30th June, 1962. The company has provided in its balance sheet as on 30th June, 1961 relating to the accounting period ended 30th June, 1961 relevant to the asst. yr., 1962-63, a sum of Rs. 7, 09, 978 under the head "Development Rebate Reserve" for the accounting periods ended 30th June, 1958, 30th June, 1959, 30th June, 1960 and 30th June, 1961, no reserves have been created in the earlier years. The reserve required to the created for the asst. yr. 1962-63 for the accounting period ended 30th June, 1961 at 75 per cent was Rs. 1, 99, 179 but the amount actually created as Reserve was Rs. 2, 65, 572. The revenue to be created for the earlier three accounting years ending 30th June, 1958, 30th June, 1959 and 30th June, 1960 in items of s. 34(3) of the IT Act, 1961, came to Rs. 4, 44, 406. The provision and appropriation of the said amounts as reserve towards the development rebate were actually contained in the Director's Report dt. 29th October, 1961 for the year ended 30th June, 1961. The accounts together with the Director's Report thereon were adopted in the Company's Annual General Meeting held on 28th December, 1961. 2. In its super-profits tax assessment for the asst. yr. 1963-64 the company claimed that the entire development rebate reserve of Rs. 7, 09, 978 should be including in the computation of capital for the purpose of calculating the standard deduction at 6 per cent of the capital. Under s. 4 of the Super Profit Tax Act, 1963, super profits tax is payable on the excess of the chargeable profits of the previous year over the "standard deduction" and in terms of s. 2(a) of the Act "standard deduction" is taken at 6 per cent of the capital of the company or Rs. 50, 000 whichever is greater. The super Tax Officer rejected the assessee's claim for inclusion of the said sum of Rs. 7, 09, 978 in the computation of the entire capital of the company, but included only a sum of Rs. 50, 000 whichever is greater. The super Tax Officer rejected the assessee's claim for inclusion of the said sum of Rs. 7, 09, 978 in the computation of the entire capital of the company, but included only a sum of Rs. 1, 99, 179 being the reserve statutorily required to be created for the accounting year ended 30th June, 1961. The reasons for disallowing the company's claim for inclusion of the balance of the reserve of Rs. 5, 10, 799 (That is Rs. 4, 44, 406 plus Rs. 66, 393) in the capital computation however, have not been specifically set out by the Supper Profit Tax Officer in his assessment order. 3. There was an appeal to the AAC, who took the view that the excess reserve of Rs. 66, 393 relating to the accounting year ended 30th June, 1961 represented the amount that was allowed in computing the company's profits for the asst. yr. 1962-63 and was, therefore, rightly excluded by the Super Profits Tax Officer in computing the capital. With regard to the balance of Rs. 4, 44, 406 he held the same having not been allowed at any time in computing the profits of the company for the purpose of income tax assessments. The ITO was not justified in excluding the same in the computation of capital. 4. The Revenue as well as the assessee took the matter in appeal to the Tribunal. It was contended before the Tribunal on behalf of the assessee that though the excess reserve of Rs. 66, 393 for the accounting year ended 30th June, 1961 was not a reserve created in terms of s. 34(3) of the IT Act, it could still be classified as to other reserves "referred to in the First Schedule to the Super Profit Tax Act, 1963, that the said sum represented the difference between the development rebate actually allowed in the asst. yr. 1962-63 and the reserve required at 75 per cent thereof. The Revenue contended that the amount provided over and above the sum of Rs. 1, 99, 179 cannot be taken to be a reserve created in terms of s. 34(3) of the IT Act, 1961 and could not, therefore, be treated as a reserve for purpose of Super Profits Tax Act, 1963. The Revenue contended that the amount provided over and above the sum of Rs. 1, 99, 179 cannot be taken to be a reserve created in terms of s. 34(3) of the IT Act, 1961 and could not, therefore, be treated as a reserve for purpose of Super Profits Tax Act, 1963. The Tribunal was, however, of the view that as the reserves were created only by the resolution of the General Body on 28th December, 1961, no reserve can be said to have been created as on 1st July, 1961, the relevant date, that the entire reserve of Rs. 7, 09, 978 cannot be taken to be a reserve created on 1st July, 1961. In that view it held that the entire amount created as development reserve cannot be taken to be a reserve as contemplated by the First Schedule to the Act and that, therefore, it cannot be included in the computation of the capital of the company. In this view the Tribunal did not consider the other contention advanced either by the assessee or by the Revenue. Aggrieved against the decision of the Tribunal, the assessee has sought a reference and the following question has been referred to :" * Whether on the facts and in the circumstances of the case, the entire sum of Rs. 7, 09, 978 could be included in computing the capital of the company as on the first day of previous year relevant to the asst. yr. 1963-64 under Second Schedule to the Super Profits Tax Act, 1963 ?" 5. In view of the decision of the decision of the Supreme Court in the CIT, Mysore Electrical Industries Ltd. and the decision of this Court in Nagammal Mills Ltd. vs. CIT, Madras the decision of the Tribunal cannot be accepted as correct. As has been pointed out in these decisions, though the appropriation is made by the company subsequent to the close of the earlier accounting year, it relates back to the first day of the accounting year i.e., 1st July, 1961 in this case. The view taken by the Tribunal that as the appropriation came to be made subsequent to the first day of the previous year it should be taken on the relevant date the profits had not been appropriated for any particular purpose is therefore, erroneous. The view taken by the Tribunal that as the appropriation came to be made subsequent to the first day of the previous year it should be taken on the relevant date the profits had not been appropriated for any particular purpose is therefore, erroneous. The reasoning of the Tribunal for rejecting the claim of the assessee for inclusion of the entire development rebate in the capital of the company cannot be sustained. The reference is answered technically in favour of the assessee. 6. The result is the Tribunal will have to consider the other contentions advanced on either side and dispose of the appeal by the Revenue as also the cross objections by the assessee afresh in accordance with law. 7. There will be no order as to costs.