Judgment :- N. V. BALASUBRAMANIAN, J. At the instance of the Revenue, the Tribunal, Madras, has stated a case and referred the following question of law for our consideration, under s. 256(1) of the IT Act, 1961. "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the debenture redemption reserve should be included in the capital computation for surtax "purposes ?" 2. The assessee, M/s Tube Investments of India Ltd. in the course of the assessment proceedings for the asst. yr. 1980-81 claimed that debenture redemption reserve of Rs. 1, 05, 20, 835 should be taken into account in the computation of the capital on the basis it is a reserve. The surtax officer, however, in the assessment order passed by him held that the sum representing debenture redemption reserve was only a provision and therefore, it could not be taken into account for the purpose of computing the capital gains (sic) of the assessee-company. The CIT(A) as well as the Tribunal accepted the assessee's claim and held that the debenture redemption reserve should be included in the capital computation for surtax purpose. The Revenue has challenged the order of the Tribunal and the Tribunal stated the case at the instance of the Revenue and referred the question of law set out above. 3. Mr. C. V. Rajan, learned counsel for the Revenue submitted that the debenture redemption reserve cannot be regarded as a reserve at all and the debenture redemption reserve is made to meet a known liability and therefore, it cannot be regarded as a reserve. In support of his submission, he strongly placed reliance on the recent decision of the Supreme Court in the case of National Rayon Corporation Ltd. vs. CIT1997 (227) ITR 764, 1997 (142) CTR 202, 1997 (93) TAXMAN 754, 1997 AIR(SC) 3487, 1997 (3) CLT 367, 1997 (7) JT 372 , 1997 (7) Supreme 396 , 1997 (5) Scale 415 , 1997 (7) SCC 56 , 1997 (142) CTR(SC) 202. 4. Mr. R. Srinivasan, learned counsel for the assessee, could not seriously dispute the position advanced by learned counsel for the Revenue. 4. Mr. R. Srinivasan, learned counsel for the assessee, could not seriously dispute the position advanced by learned counsel for the Revenue. However he submitted that it is not clear whether there was any excess provision by the creation of the debenture redemption reserve and to that extent the amount can be treated as the reserve and can be included in the capital computation of the assessee-company. 5. We have carefully considered the rival submissions of learned counsel for the Revenue as well as learned counsel for the assessee. The question whether the debenture redemption reserve can be included in the capital computation of the company under the provisions of the Surtax Act, came up for consideration before the Supreme Court in the case of National Rayon Corporation Ltd. cited supra. The Supreme Court held that the amount set apart for redemption to meet a known liability cannot be regarded as a reserve but will be taken only as a provision and could not be included in the capital of the company. However, there are no basic facts found by any of the authorities whether the debenture redemption reserve created by the assessee was to meet a known liability and whether there was any excess amount and to that extent, the excess amount can be treated as a part of the capital of the company. In other words, out of the debenture redemption reserve created by the assessee, the amount standing to meet its known and ascertained liability arising out of the issue of its debenture will be treated only as a provision and if there is any excess over and above the said sum, it can be treated as a reserve provided other conditions of the creation of reserve are satisfied. Since the Tribunal has not gone into this aspect of the matter, we direct the Tribunal to decide the question afresh in the light of the principles laid down by the Supreme Court in National Rayon Corporation Ltd. cited supra and determine whether a portion of the debenture redemption reserve set apart by the assessee can be included in the computation of the capital of the assessee for the surtax purpose. Since the Tribunal has not posed the proper question and decided the question, we are of the view that the Tribunal should consider the question afresh in the light of the Supreme Court decision in the case of National Rayon Corporation Ltd. (supra) Though we answer the question of law referred to us in the negative and in favour of the Revenue, the Tribunal is directed to consider the question afresh as directed above, No costs.