In the Reference that was made under section 256(1) of the Income Tax Act, 1961 read with section 10 of the at the instance of the assessee company the following question of law was referred to the Andhra Pradesh High Court for its opinion: "Whether on the facts and in the circumstances of the case the provisions (a) for taxation Rs. 33,68,360, (b) for retirement gratuity Rs. 9,08,106 and (c) for dividends Rs. 18,41,820, could be treated as 'reserves ' for computing the capital for the purpose of super profits tax under Second Schedule to the for the assessment year 1963 64 ?" F The High Court on a consideration of several authorities answered the question in respect of the three items in favour of the Revenue and against the assessee company and held that the three sums so set apart by the assessee company in its balance sheet were not "reserves" and had to be excluded in the computation of its capital for the purpose of levying super profits tax payable on the chargeable profits tor the relevant accounting year.