Judgment :- K.A. THANIKKACHALAM, J. In compliance with the orders of this court dated March 23, 1983, the Tribunal referred the following three questions for the opinion of this court under section 256(2) of the Income-tax Act, 1961 : "1. Whether, on the facts and in the circumstances of the case, and having regard to the provisions of the Explanation to rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, the Appellate Tribunal was correct in holding that the dividends declared should not be deducted from the general reserve in computing the capital for the purpose of levy of surtax ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the general reserve as on the first day of the previous year should not be reduced by the amount of dividend declared at a future date at the general body meeting for the purpose of computing the capital under the Companies (Profits) Surtax Act, 1964 ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the Income-tax Officer was not correct in applying rule 4 of the Second Schedule to the Companies Profits) Surtax Act, 1964, in respect of the deductions allowed under Chapter VI-A of the Income-tax Act, 1961 ?" * In so far as question No. 1 is concerned, the point for consideration is whether having regard to the provisions of the Explanation to rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 dividends declared should not be deducted from the general reserve in computing the capital for the purpose of levy of surtax. In so far as question No. 2 is concerned, it relates to whether the general reserve as on the first day of the previous year should be reduced by the amount of dividend declared at a future date at the general body meeting for the purpose of computing the capital under the Companies (Profits) Surtax Act. Both the questions came up for consideration before the Supreme Court in Indian Tube Co. Ltd. v. CIT wherein the Supreme Court held that though the general body meeting of the shareholders resolved and appropriated the sum of Rs. 76 lakhs towards the dividend from the reserve of Rs. Both the questions came up for consideration before the Supreme Court in Indian Tube Co. Ltd. v. CIT wherein the Supreme Court held that though the general body meeting of the shareholders resolved and appropriated the sum of Rs. 76 lakhs towards the dividend from the reserve of Rs. 90 lakhs on May 31, 1963, the appropriation related back to the calendar year 1962 to which it related and, as on January 1, 1963, the sum of Rs. 76 lakhs was a provision and only Rs. 14 lakhs could be treated as a reserve for the computation of capital. In view of the above decision of the Supreme Court, we answer the above two questions in the negative and in favour of the Department. In so far as question No. 3 is concerned, it relates to whether the Appellate Tribunal was right in holding that the Income-tax Officer was not correct in applying rule 4 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, in respect of the deduction allowed under Chapter VI-A of the Income-tax Act, 1961. In Second ITO v. Stumpp Schuele and Somappa Pvt. Ltd. the Supreme Court held that the relief allowed under section 80-I (priority industry) and section 80J (newly established industrial undertaking) of the Income-tax Act were not "income, profits and gains not includible in the total income" of the company under rule 4 of the Second Schedule to the said Act and would not come to diminish the capital of the company to be computed for the purpose of the Surtax Act. In view of the above said decision, we answer question No. 3 in the affirmative and against the Department. No costs.