Home Case Index All Cases Income Tax Income Tax + SC Income Tax - 1996 (2) TMI SC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
1996 (2) TMI 129 - SC - Income TaxWhether the provision for taxation can be deducted from the cost of excluded investments and would, therefore, augment the capital base of the company for purposes of the Super Profits Tax Act, 1963, and the Companies (Profits) Surtax Act, 1964? Held that:- In the present case there is no systematic accumulation of cash or any separation of assets to meet future tax liabilities. There is only an accounting entry of an exact sum being earmarked for payment of tax liability arising at the end of the current accounting year. Such a provision cannot be considered as a fund. The assessee, however, has submitted that the circular of the Board has taken the meaning of the term "fund" in its literal or etymological sense. We fail to see, how the circular helps the assessee in the case before us. A provision for taxation of the kind in question is not a fund either etymologically or in accounting parlance. The more relevant meaning of the term "fund" in the context of the two Acts is what that term is commonly considered to connote when used in a balance-sheet or profit and loss account of a company. A specific provision for an ascertained liability is not a fund within the meaning of that term in the rules in question. In favour of the Revenue
|