THE FIRST NATIONAL CITY BANK vs THE COMMISSIONER OF INCOME-TAX,BOMBAY CITY.

The Supreme Court held that the term 'reserves' in Rule 2(1) of Schedule II of the Business Profits Tax Act, 1947 encompasses 'undivided profits' as maintained by the appellant bank. The Court clarified that these undivided profits are integral to the capital structure and must be included when computing capital and reserves for the purpose of abatement under the Act. Consequently, the appeal was allowed, affirming the inclusion of undivided profits in the assessment.