B. GUPTA., A.M. In this sur-tax appeal filed by revenue following objections have been raised against order passed by CIT(A) in respect of sur-tax assessment of respondent for asst. yr. 1974-75: "On facts and in circumstances of case, CIT(A) was not correct in Law and on facts in holding that for purpose of computation of chargeable profits, gross dividend income has to be excluded and not net dividend income. explanation to first schedule though inserted w.e.f. 1st day of April, 1981 is merely of classificatory nature. On facts and in circumstances of case, CIT(A) was not correct i n law and on facts in directing assessing officer to treat Debenture Redemption Fund as reserve and not provision, for purposes of computation of capital employed. On facts and in circumstances of case, CIT(A) was not correct i n law and no facts in holding that proportionate reduction in capital employed for surtax purposes as done by Assessing Officer in para 3 of his order should be deleted." Smt. Manjari Kakkar, ld. DR and Shri O.P. Vaish, Advocate, ld. authorised counsel of assessee company have been heard. In respect of first ground of appeal, we notice that same very issue had come up for decision before ITAT in STA no. 11 (Del)/77 relating to sur-tax assessment of assessee company for asst. yr. 1972-73. It had been held in that decision dt. 30th Aug., 1980 that while computing chargeable profits, it is not net dividend income but gross dividend income which had to be excluded. Explanation beneath cl.s.(i) of First Schedule of Surtax Act was subsequently inserted by Finance Act of 1981 w.e.f. 1st day of April, 1981. It reads as follows: Explanation: Notwithstanding anything contained in any clause of this rule, amount of any income or profits and gains which is required to be excluded from total income under that clause shall be only amount of such income or profits and gains as computed in accordance with provisions of IT Act (except chapter VIA thereof), and in case where any deduction is required to be allowed in respect of such income or profits and gains under said Chapter VIA, amount of such income or profits and gains computed as aforesaid as reduced by amount of such deduction". It is contended by Smt. Manjari Kakkar, ld. departmental representative that above provisions contained in Explanation are classificatory in nature and, therefore, should be applied to all assessments prior or subsequent to asst. yr. 1981-82. We are unable to persuade ourselves to accept this representation. If that was intention of law makers, it could have been so expressed in specific terms. law could have been amended retrospectively if Parliament so willed. Since that was not done and since provisions of Explanation were made operative only w.e.f. 1st day of April, 1981, we will not be able to accept representation made on side of Department. order of Tribunal for asst. yr. 1972-73 mentioned above still held field in asst. yr. 1974-75 and, therefore, we will respectfully follow it and reject first ground in departmental appeal. issue raised in ground No. 2 of Revenue's appeal is also not Res integra. This point had also come up before Tribunal in STA No. 13 (Del)/75- 76 relating to surtax assessment of respondent company for asst. yr. 1971-72. It had been held by Tribunal by its order dt. 27th Jan., 1977 that Debenture Redemption Fund was provision and not reserve and, therefore, not includible in capital base. Respectfully following decision of Tribunal in assessee's own case and having regard to fact that Debenture Redemption Fund was fund created for redeeming debentures at future date i.e. for meeting forseeable liability in future, it would be appropriate to treat it as provision and not reserve. order of CIT(A) on point is, therefore, upheld and ground No. 2 in departmental appeal is also rejected. In paragraph 3 of STA Order ITO held that since assessee had been allowed deduction aggregating at Rs. 26,05,424 under provisions of ss. 80M and 80J, s. capital base was to be proportionately reduced as per 4 of Second Schedule. CIT(A) reversed finding of ITO by following decision of ITAT in assessee's own case in STA No. 11 (Del)/77-78 decided on 30th Aug., 1980. revenue is aggrieved of order of CIT(A) and hence ground No. 3 has been raised in this departmental appeal. We find that issue is squarely covered against Revenue not only by above mentioned decision of Tribunal but also by decision of Hon'ble Delhi High Court in case of CIT vs. Dalmia Cement (Bharat) Ltd. (1980) 126 ITR 736 (Del). Hon'ble High Court held that r. 4 of Sch. II to Companies (Profits) Surtax Act, 1964, which provides that capital of company computed under rr. 1 to 3 for purpose of ascertaining statutory deduction, should be diminished proportionately by reference to "income, profits or gains . not includible in its total income", refers only to such income, profits and gains which are not at all includible in total income as computed under IT Act and not to items of deductions permitted under Chapter VI-A (e.g. ss. 80G, 80-I, 80K, 80L, 80M and 80N of IT Act., 1961. Respectfully following law laid down by Hon'ble jurisdictional High Court, we shall uphold view point of CIT(A). In conclusion, appeal filed by Revenue fails on all three points and is consequentially rejected. *** INCOME TAX OFFICER v. MODI INDUSTRIES LTD.