Holding

Investment reserve, rehabilitation reserve, capital reserve and depreciation reserve are reserves to be included in capital under the Companies Profits (Surtax) Act, 1964, while forfeited dividend reserve is a provision and must be excluded.

Summary

Elgin Mills Ltd., a textile manufacturer, claimed that its investment reserve, rehabilitation reserve and forfeited dividend reserve should be treated as reserves for computing capital under the Companies Profits (Surtax) Act, 1964 for the assessment year 1964-65. The Income‑Tax Officer excluded all three amounts, leading to appeals before the Tribunal, the Allahabad High Court and finally the Supreme Court. The principal issues were whether the Tribunal could rely on the Super Profits Tax Act, 1963 instead of the Companies Profits (Surtax) Act, 1964 for capital computation, and whether the three accounts constituted "reserves" within the meaning of the 1964 Act. The Court held that the two Acts are in pari materia and that the same principles apply, and clarified the distinction between a reserve (an appropriation of profit) and a provision (a charge for a known liability). Accordingly, investment reserve, rehabilitation reserve, capital reserve and depreciation reserve were held to be reserves and must be included in capital, whereas the forfeited dividend reserve was a provision and must be excluded. The appeal by the Commissioner was allowed in part, confirming the inclusion of the first four items and the exclusion of the forfeited dividend reserve; the separate appeal concerning the same items was dismissed.

Issues considered

Whether the Tribunal was justified in applying the principles of the Super Profits Tax Act, 1963 rather than the Companies Profits (Surtax) Act, 1964 for computing the capital of the assessee.
Whether the investment reserve, rehabilitation reserve and forfeited dividend reserve qualify as "reserves" under the Companies Profits (Surtax) Act, 1964 for the purpose of statutory deductions.

Legislation cited

Companies Act, 1956s. Schedule VI Part III
Companies (Profits) Surtax Act, 1964s. 4, s. Schedule 2
Super Profits Tax Act, 1963s. 4, s. Schedule 2

Subjects

statutory deductionsreserve vs provisioncapital computationCompanies Profits (Surtax) ActSuper Profits Tax Actincome tax lawinterpretation of reserves

Judgment

A

COMMISSIONER OF INCOME TAX, KANPUR
v.
TIIE ELGIN MILLS LTD., KANPUR
B
JULY 31, 1986

[R.S. PATIIAK, SABYASACHI MUKHARJI AND
K.N. SINGH, JJ.]

Companies (Profits) Surtax Act, 1964, Schedule 2 Rule }-
c ''Investment reserve'', ''rehabilitation reserve'', ''capital reserve'',
"depreciation reserve" and "forfeited dividends"-Whether statutory
deductions--''provision" and "reserve" -Distinction between. •

In Civil Appeal No. 1665 of 1974, a dispute arose between the
D respondeut-assessee and the Revenue with regard to the computation of
"standard deductions" under the provision of Companies Profits
(Surtax) Act, 1964. The respondent-assessee claimed that the three
amounts in respect of three accounts, namely, (a) investment reserve (b)
rehabilitation reserve and (c) forfeited dividend reserve should be
tre11ted as reserves for the purposes of computation of its capital for the
E assessment year 1964-65 of which the relevant previous year ended on
30th Sept., 1963. The Income-tax Officer did not include any of the said
"reserves" in the capital of the respondent-<0mpany on the basis that
these did not represent "reserve" in the real sense. The matter, ulti-
mately went before the Tnbunal. It held: (i) that all the three accounts
represented "reserves" for the purposes of assessment under the Super
F Profits Tax Act, 1963 and as the principle involved was the same as
under the Companies Profits (Surtax) Act, 1964, the accounts in ques-
tion represented "reserves" nuder the latter Act also. The High Court
also, relying on its earlier decision in Commissioner of Income-tax,
Kanpur v. British India Corporation (P) Ltd. 92 ITR 38, affirmed the
view taken by the Tribunal and held (i) that under both the Acts charg-
G ing sections (s. 4) were identically worded except that expression
(Standard Deduction) in Super Profits Tax Act, 1963 had been replaced
by the expression "statntory deductions" in Companies Profits
(Surtax) Act, 1964; (ii) that under both Acts these deductions had to be
computed with reference to the capital employed in the assessee's-
Companies; and (iii) that under both the Acts reserves of the company
H were to be treated as its capital and the only difference was in the
408
C.LT. v. ELGIN MilLS 409

Second Schedule to the Companies Profits (Surtax) Act, 1964 where an A
explanation had been added, and this explanation merely clarified what
was implicit in the Super Profit Tax Act, 1963.

In C.A. No. 145 of 1976 the assessee-respondent had shown
capital of Rs.2,63, 79,218 which included inter-a/ia investment re- B
serve, rehabilitation reserve, capital reserve, depreciatiq_n reserve and
forfeited dividends. The High Court held that the fU"st four items con·
stituted reserves and the forfeited dividends account did not represent
reserve.
~

r
\
Dismissiq the C.A. No. 145 of 1976 and allowing CA No. 1665 of
1974 in part, c
HELD: 1.1 The conclusion of the High Court in CA 1665of1974
holding that the investment reserve and rehabilitation reserve were
reserves and were entitled to be treated so under the relevant Act is
right. But, in the facts of the case, the High Court was not right in
D
holding that the "forfeited dividend reserve" was reserve. However, in
CA No. 145 of 1976, the Tribunal and the High Court had rightly
excluded "forfeited dividend account" from the reserve. [417G-H; 418DJ

2.1 The Supreme Court in Vazir Sultan Tobacco Co. Ltd. v.
Commissioner of Income Tax [1981] 132 ITR, 559 held that the expres-
E
sion "reserve" in Super Profits Tax Act, 1963 and the Companies Profits
(Surtax) Act, 1964 are inpari materia. [413C-D]

2.2 The distinction between "provision" and "reserve'' is while
the "provision" is a charge of profits which are taken into account in
the gross receipt of Profits and Loss Account, "reserve" is an appropri-
F
ation of profit to provide for the asset which it represented. Reserve
might be general or specific reserve, what is required is that the amount
should be kept apart for one or the other purpose either general or
specific. The distinction between provision and reserve must be found
out bearing in mind the main features of the reserve. These are: (i) it
must be an appropriation of profits, current or accumulated and not a
G
charge against the profits for the year; (ii) the conduct of the parties
must bear out that intention; (iii) it must not be to set apart to meet any
. ~. known liability-a liability known to exist on the date of the balance·
sheet. [416A-C]

In the instant cases, keeping in view the aforesaid tests, invest- H
410 SUPREME COURT REPORTS 11986] 3 S.C.R.

A ment reserve, rehabilitation reserve, capital reserve and depreciation
reserve constituted "reserves" and are entitled to be treated as such
under Companies Profits (Surtax) Act, 1964. The "forefeited divi-
dends" do not represent "reserve". l417G-H; 418A-B]

Vazir Sultan Tobacco Co. ltd. v. Commissioner of Income Tax,
B
11981] 132 ITR 559; Metal Box Co. Ltd v. Their Workmen, 73 ITR 53 at
67-68; and Commissioner of Income Tax (Central) Calcutta v. Standard
V aceum 0 ii Co., 59 ITR 685 at 698 relied upon.
Commissioner of Income-tax, Kanpur v. British India Corpora-
tion (P) Ltd., 92 ITR 38approved.
c Commissioner of Income Tax v. Eyre Smelting Private Ltd., 118
ITR 857 referred to.
CIVIL APPELLATE JURISDICTION: Civil Appe•I No. 1665 "'(
of 1974
D From the Judgment and Order dated 28.9.1973 of the Allahabad
High Court in LT. Reference No. 195 of 1971.

With Civil Appeal No. 145 of 1976.

Dalip Singh, K.C. Dua and Miss A. Subhashini for the Appel-
lant.
E
Harish Salve, K.J. John, Ranjit Kumar and B.P. Singh for the
Respondent.

The Judgment of the Court was delivered by
F
SABYASACHI MUKHARJI, J. These two appeals were heard
together. Civil Appeal No. 1665 of 1974 arises from the decision of the
High Court of Allahabad in Income: Tax Reference No. 195 of 1971.

The assessee, Elgin Mills Ltd., at the relevant time, was a public
limited company engaged in the business of manufacture of textile
G goods. The assessment year involved is the year 1964-65 of which the
relevant previous year ended on 30th September, 1963. For the pur-
poses of assessment under the provisions of Companies Profits
(Surtax) Act, 1964, a dispute arose between the assessee and the re-
venue with regard to the Cf'mputation of "Standard deductions". The
company claimed that the following amounts should be treated as
H
C.l.T. v. ELGIN MILLS [MUKHARJI, J.) 411

reserves for the purposes of computation of its capital: A

(a) Investment Reserve-Rs.85,00,000
(b) Rehabilitation reserve-Rs.40,00,000
(c) Forfeited Dividend reserve-Rs.96,374
B
The Income-tax Officer did not include any of the said 'reserves'
in the capital of the assessee-company on the basis that these did not
represent reserve in the real sense. On appeal, the Appellate Assistant
Commissioner held that the Rehablitation reserve and Forfeited Di-
vidends reserve represented reserves but the investment reserve ac-
count did not constitute real reserve. Both the assessee as well as the c
revenue went up in appeal before the Tribunal. The Tribunal disposed
of these appeals by a similar order along with two similar appeals
relating to the assessment year 1963-64 which arose out of proceedings
under the Super Profits Tax Act, 1963. The Tribunal held that all the
three accounts represented reserves for the purposes of assessment
D
under the Super Profits Tax Act, 1963. The Tribunal was further of the
view that all the three represented reserves for the purposes of assess-
ment under the Super Profits Tax Act, 1963 and as the principle in-
volved was the same as under the Companies Profits (Surtax) Act,
1964, the Tribunal held that the accounts in question represented re-
serves under the latter Act also. At the instance of the Commissioner,
E
reference was made to the High Court for the assessment year 1964-65
on the following questions:

- "l. Whether, on the facts and in the circumstances of the
case, the tribunal was right in arriving at its decision by
applying the principles laid down in the second schedule to F
the Super Profits Tax Act, 1963, instead of the provisions
of the second Schedule to the Companies Profits (Surtax)
Act, 1964, for computation of capital of the assessee com-
pany for the assessment year 1964-65.

G
2. Whether, on the facts and in the circumstance of the
case, the tribunal was right in holding that (a) Investment
Reserve (b) Rehabilitation reserve ( c) Forfeited Dividend
Reserve were includible in the capital computation of the
company in accordance with the second schedule to the
Companies Profits (surtax) Act, 1964." H
412 SUPREME COURT REPORTS [1986] 3 S.C.R.

A The High Court noted that in the connected reference No. 196 of ·I<-
1971-Commissioner of Income-tax v. Elgin Mills Company Ltd. (de-
cision dated 19th July, 1973)) arising out of proceedings under the
Super Profits Tax Act, 1963, it had already held that these accounts in
question constituted reserve in the real sense and as such should be
taken into consideration in detennining the standard deductions under
B
section 9(2) of the Act, 1963. It was not disputed before the High
Court that if the present reference had been under the Super Profits ).
Tax Act, 1963, the accounts in question would have to be held as
reserves by the High Court in view of its previous judgment. But it was
~

c
contended that the provisions of the Companies Profits (Surtax) Act,
1964 were different from the provisions of the Super Profit Tax Act,
1963. The High Court did not accept this contention. The High Court
..
was of the view that under both the Acts, charging sections ( sectio'l 4)
were identically worded except that the expression ''standard deduc- ~-'

tion" in Super Profits Tax Act, 1963 had been replaced by the expres- ~
sion "statutory deduction•" in the Companies Profits (Surta".) Act,
1964. Under both Acts these deductions had to be computed with
D
reference to the capital employed in the assessee company. Under
both the Acts reserves of the company were to be treated as its capital
and the only difference was in the second schedule to the Companies
(Profits) Surtax Act, 1964, an explanation had been added. The said
explanation was to the following effect:
E
-"
"For the removal of doubts it is hereby declared that any
amount standing to the credit of any account in the books
of a company as on the first day of the previous year rele-
vant to the assessment year which is of the nature of item ( 5)
or item (6) or item (7) under the heading "RESERVES
AND SURPLUS" or of any item under the heading
j -
F
"CURRENT LIABILITIES AND PROVISIONS" in the
)L
column relating to "Liabilities" in the Form "Balance-
Sheet" given in part I of Schedule VI to the Companies
Act, 1956 (I of 1956), shall not be regarded as a reserve for
the purposes of computation of the capital of a company
under the provision of this schedule."
G I

This explanation, the High Court noted, merely clarified what ).._
was implicit in the Super Profit Tax Act, 1963. Item No. 5 in the
prescribed Balance Sheet under the Companies Act is "Surplus" i.e.
H Balance in profit and loss account after providing for proposed alloca-
C.l.T. v. ELGIN MILLS [MUKHARJI, J.[ 413

~ lions, namely, Dividend, Bonus, or Reserves. Item No. (6) was "Prop- A
osed additions to Reserves" and item No. (7) was "Sinking Funds".
The Accounts mentioned in the explanation would not form a reserve
for the purposes of the computation of capital of a company. Tn any
case the High Court was of the view that none of the accounts in
dispute fell under the heading "current liabilities". It was contended
B
before the High Court on behalf of the revenue that any amount

~ credited to those accounts during the relevant previous year would fall
in item No. 6 viz. proposed additions to reserves. The High Court

-•
found that there were no additions to those funds during the relevant
previous year inasmuch as the amount standing in those accounts were
being brought forward from year to year. In those circumstances the
Tribunal was right in deciding the question with regard to the admissi- c
bility of the three accounts in question on the principle application to

,. Super Profits Tax Act, 1963. This Court in Vazir Sultan Tobacco Co.
Ltd. v. Commissioner of Income Tax, [1981] 132 I.T.R. 559 held that
the expression "reserve" in Super Profits Tax Act, 1963 and the Com-
parries Profits (Surtax) Act, 1964 are in pari materia.
D
On merits, it was agreed that the points were covered by the
previous decision of the High Court in the case of Commissioner of
Income-tax, Kanpur v. British India Corporation (P) Ltd., 92 I.T.R.
_. 38. Accordingly, the High Court answered both the questions in the
affirmative and in favour of the assessee. This appeal arises out of the
E
said decision of the High Court. In Commissioner of Income-tax,
Kanpur v. British India Corporation (P) Ltd. (supra), the High Court

- noted the distinction between 'provision' and 'reserves' and observed
that when an amount was set apart for a future liability, it was called a

'
.ll:
reserve and when it was set apart to meet an existing liability, it was
called a provision. The High Court was of the view that the Tribunal in
that case was right in holding that capital reserve, stocks and stores
reserves, bad and doubtful debts reserves, obsolescence reserve, loans
and insurance reserves and investment reserves were to be included in
F

the computation of capital. The Tribunal was not right in including,
according to the High Court, forfeited money reserve as the assessee
had been transferring to this account dividends which had not been
G
collected by the share holders after they had been declared, and as and
when the shareholders made a claim, made payments and debited the
->( same to the account. The High Court, therefore, was of the view that
this account represented a provision in respect of an existing liability.

The High Court in Income-Tax Reference No. 196 of 1971 had to
H'
414 SUPREME COURT REPORTS [1986] 3 S.C.R.

A deal with investment reserve account, rehabilitation reserve account, 1'-
capital reserve account and depreciation reserve account and held that
these were reserves but the account maintained as dividend account
did not represent reserve.

B The High Court in its judgment noted that on the 19th July 1973
relying on other judgment in Income-Tax Reference No. 200 of 1917
Commissioner of Income-Tax v. The Saran Engineering Co. Ltd. had
answered the question by saying that the aforesaid items were re- f
serves. This is the subject matter of civil appeal No. 1599 of 1974 which
~
c
will also be disposed of by another judgment of this Court.

Civil Appeal No. 1665 of 1974 and Civil Appeal No. 145 of 1976
which arose out of the Income-Tax Reference No. 196 of 1971 have
-
been heard together and are being disposed of by this judgment.

D
In this connection it would be desirable to dispose of Civil Ap-
peal No. 145 of 1976 separately first. It was submitted that the assessee
""'
had shown capital of Rs.2,63,79,218 which included the aforesaid re-
serves including investment reserves, rehabilitation reserve, capital
reserve, depreciation reserve and forfeited dividends. The submission
on behalf of the revenue by Sree Dalip Singh was that the amount of
Rs.85 lakhs in the relevant year as investment reserve was set apart by
the assessee company to meet the liabilities of its Bombay Sub- ~
'E
sidiaries, M/s Madhav Mills Ltd. and Calico Processors Ltd. which
were known to the assessee on the date of the balance-sheet. The

F
Directors' report, according to the revenue, left no room for doubt
that these were anticipated losses of the assessee company in the form
of the investments made in its Bombay subsidiaries known ai the date
of the balance sheet. These were liabilities, according to Sree Singh
l
-
actually staring in the face of the assessee company when it prepared
the balance sheet. The Tribunal had held that it was a reserve because )I
it was formed by transfer of the amount from capital/General reserve.
This according to the revenue, could not be accepted. Revenue sub-
mitted that it was a common ground that originally the amount was set
apart out of the undistributed mass of profits and therefore the mo-
G
ment it was taken out of the capital or general reserve, it ceased to be a
capital or general reserve, and but for its being set apart to meet the
liabilities of its subsidiaries, it had again gone back and formed part of )..
the undistributed mass of profits and thereby assumed its original
character. It was submitted that the reserve in order that it might be so
H called in the real sense of the term must come out of the profits of the
C.I.T. v. ELGIN MILLS IMUKHARJI,J.) 415

company. But if reserves were constituted out of assets which were sold A
or by any other means it would be difficult to term the amounts shown
as reserve. It was sul:mitted that the investments by the assessee com-
pany in the Bombay subsidiaries were in the nature of bad and doubtful
debts. Therefore, these were dead losses of the assessee company as the
holding company, and these amounts were ultimately bound to be writ-
B
ten off and according to the revenue's submission, the substance of the
matter clearly was that the amount of Rs.85 lakhs though shown as a
reserve, was, in fact, a provision to meet the anticipated losses or bad
and doubtful debts in the shape of investments in the two subsidiaries
aforesaid which were shown at the date of the balance sheet.

For the assessee Sree Salve drew our attention to the distinction C
between reserve and provision which has been discussed in the decision
of this Court in Metal Box Co. Ltd. v. Their Workmen, 73 I.T.R. 53 at
..,.. 67-68.

According to the revenue, the nature and object of the subsi-
D
diary companies have to be kept in view and the practical result, re·
venue contended before us, was that the shareholders of the holding
company whose share capital had been employed for the floatation of
the subsidiary companies had not only no power to control the dealings
of the subsidiary companies but in fact had no knowledge of, nor any
right to the knowledge of or dealings of the subsidiary companies.
E
The expressions 'Provision' and 'Reserve' are defined in
Schedule VI Part III to the Companies Act, 1956. In the decision of
this Court in Vazir Sultan's case (supra) it has been held that a·provi-
sion was meant to provide for any known liability and the substance of
the matter had to be kept in view. It was further submitted by Sree
F
Singh that the depreciation reserve could not be considered to be
reserve in the real sense at all. Forfeited dividends reserve of
Rs.1,08,771 had to be a provision.

On the other hand, on behalf of the revenue, it was submitted
that in order to constitute reserve, there must be an appropriation of
profits current or accumulated and not a charge against the profits for G
the year. The conduct must bear out the intention to create a reserve.
It must not be to set apart to meet any known liability, a liability
known but existing on the date of the balance-sheet. The explanation
'reserve' has been defined in the text books of Accountancy which has
been noted by this Court. It was urged that it could not be disputed
H
416 SUPREME COURT REPORTS 11986] 3 S.C.R.

A that reserve might be general or specific reserve, what was required
was that amount should be kept aprat for one or the other purpose
either general or specific. The distinction between provision and re-
serve must be found out bearing in mind main features of the reserve.
These are (I) It must be an appropriation of profits, current or ac-
B cumulated and not a charge against the profits for the year. (2) The
conduct.of the parties must bear out that intention. (3) It must not be
to set apart to meet any known liability-a liability known to exist on
the date of the balance sheet. Reference in this connection may be
made to the observations of this Court in Vazir Sultan's case (supra) at
pages 569-70. The Calcutta High Court in Commissioner of Income
Tax v. Eyre Smelting Private Ltd., 118 I.T.R. 857, noted the charac-
c teristics of 'provisions' as well as 'reserves'. It held, inter alia, that
provisions were made against anticipated losses and contingencies, it
held further that an amount set aside of the profits designed to meet a
contingency or liability or commitment or diminution in the value of
the assets known to exist would be a reserve, and an amount set aside
to provide for a known liability to which the amount cannot be de-
D
termined with substantial accuracy would be a provision. The said
High Court differed from the decision of the Allahabad High Court in
British India Cor-poration (P) Ltd. (supra) in respect of 'bad and
doubtful debts.' Whether in respect of bad and doubtful debts the
account could be treated as reserve or provision would depend upon
the facts and circumstances of the case.
E
The distinction between 'provision' and 'reserve' has been
clarified by this Court in Metal Box Company of India Ltd. v. Their
Workmen (supra) at pages 67-68 which states as follows:

'The next question is whether the amout so provided is a
F
provision or a reserve. The distinction between a provision
and a reserve is in commercial accountancy fairly well
known. Provisions made against anticipated losses and
contingencies are charges against profits and, therefore, to
be taken into account against gross receipts in the P. & L.
account and the balance-sheet. On the other hand, reserves
G
are, appropriations of profits, the assets by which they are
represented being retained to form part of the capital emp-
loyed in the business. Provisions are usually shown in the
balance-sheet by way of deductions from the assets in re-
spect of which they are made whereas general reserves and
H reserve funds are shown as part of the proprietor's interest
C.I.T. v. ELGIN MIUS (MUKHARJI, I.I 417

(see Spicer and Pegler's Book-keeping and Accounts, 15th A
Edition, page 42). An amount set aside out of profits and
other surpluses, not designed to meet a liability, conting-
ency, commitment or diminution in value of assets known
to exist at the date of the balance-sheet is a reserve but an
amount set aside out of profits and other surpluses to pro- B
vide for any known liability of which the amount cannot be
determined with substantial accuracy is a provision: (see
William Pickles Accountancy, second edition, p. 192; Part
ill, clause 7, Schedule VI to the Companies Act, 1956:
which defines provision and reserve)."

This Court in Commissioner of Income Tax (Central) Calcutta v. c
Standard Vaccum Oil Co., 59 I.T.R. 685 at 698, observed that the
ordinary meaning of the expression reserve was something specifically
kept apart for further use or for specific occasion. The observations
made therein will have to be understood in the light of the subsequent
decisions of this Court in Metal Box (supra) and Vazir Sultan (supra).
D
This Court in Vazir Sultan Tobacco Co. Ltd. etc. v. Commis-
sioner of Income-tax etc. (supra) considered the expression 'reserve' in
the Super Profits Tax Act, 1963 and Companies (Profit) Surtax Act,
1964. It is not necessary to set out all the conclusions of this Court.
E
Our attention was drawn to Datta's On the Company Law (Third
Edition) at page 421. "Reserves" consist of appropriations from pro-
fits and other surplus and retained for future use. This, however, does
not include any amount which had been kept to meet any liability or
diminution in value of assets known to exist as on the date of the
balance sheet. The essence and substance of the matter has to be kept
F
in view.

As reiterated before, the distinction between 'provision' and 're-
serve' is while the 'provision' is a charge of profits which are taken into
account in the gross receipt of Profits & Loss Account, 'reserve' is an
appropriation of profit to provide for the asset which is represented.
G
Keeping these tests and the facts of these appeals in mind, we
must hold that the conclusion of the High Court in Civil Appeal No.
1665 of 1974 holding that the investment reserve and rehabilitation
reserve were reserves and were entitled to be treated so under the
relevant Act is right. But in the facts of the case, the High Court was H
418 SUPREME COURT REPORTS [1986] 3 S.C.R.

A not right in holding that the forfeited dividend reserve was reserve and
question No. 2 also in the affirmative. It should have followed in this
respect its previous decision in respect of forfeited dividend reserve in
.
Commissioner of Income-Tax v. British India Corporation (supra).
The appeal, therefore fails, except on the point of "Forfeited Dividend
Reserve."
B
In Civil Appeal No. 145 of 1976, we are concerned with five
items as mentioned i.e. investment reserve, rehabilitation reserve,
capital reserve, depreciation reserve and forfeited dividends and in
view of the facts found, we are of the opinion that first four items
constituted reserves and were entitled to be treated as such under the
c Act and the forfeited dividends did not represent reserve. This appeal
accordingly fails in view of the facts found by tribunal and reiterated
by the High Court and the principles · applicable as mentioned
hereinbefore. The High Court in its order had excluded "Forfeited
dividend account" from the reserve. The High Court was right in so
doing.
D
In the facts and circumstanes of the case, the parties will pay and
bear their own costs in both the appeals.

CA 1665/74 allowed in part.
M.L.A. CA 145/76 dismissed.

"