Second ScheduleRULES FOR COMPUTING THE CAPITAL OF A COMPANY FOR

Second Schedule, item 1

1. For the purposes of ascertaining the abatement under this Act in respect of any chargeable accounting period, the capital of a company shall be computed in accordance with the following rules.

Second Schedule, item 2

2. (1) Where the company is one to which rule 3 of Schedule I applies, its capital shall be the sum of the amounts of its paid-up share capital and of its reserves in so far as they have not been allowed in computing the profits of the company for the purposes of the Income-tax Act, 1922, diminished by the cost to it of its investments or other property the income from which is not to be included in the profits, so far as that cost exceeds any debt for money borrowed by it. (2) In all other cases, the capital shall be the sum ascertained in accordance with the first part of sub-rule (1), diminished by the cost to the company of its investments so far as that cost exceeds any debt for money borrowed by it. Explanation-A reserve or paid-up share capital brought into existence by creating or increasing (by revaluation or otherwise) any book asset is not capital for the purposes of ascertaining the abatement under this Act in respect of any chargeable accounting period.

Second Schedule, item 2A

2A. Notwithstanding anything contained in rule 2, where only a part of the profits of a company is chargeable under the provisions of this Act, its capital shall be the sum ascertained in accordance with the said rule diminished by an amount which bears to that sum the same proportion as the amount of its profits not so chargeable bears to its total profits.

Second Schedule, item 3

3. So much of the premium realised by a company from the issue of any of its shares as is retained in the business shall be regarded as forming part of its paid-up capital for the purposes of rule 2.

Second Schedule, item 4

4. Any deposits with the Government under section 10 of the Finance Act, 1942, or section 2 of the Excess Profits Tax Ordinance, 1943, shall not be regarded as investment or other property for the purposes of this Schedule.