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1996 (3) TMI 128 - SC - Income TaxWhether the amounts set apart by the assessee during each assessment year for "bad and doubtful debts" in the balance-sheets of the relevant period constitute "reserve" as contemplated by rule 1(xi)(b) of the First Schedule and rule 1(iii) of the Second Schedule to to the Companies (Profits) Surtax Act, 1964? Held that:- The High Court was in error in surmising that the assessee being a banking company is bound to have bad and doubtful debts. It need not necessarily be so. It is not bound to anticipate on the date of the preparation of the balance-sheet that all or any of its debts "are bound to be bad and doubtful". It all depends upon the facts and circumstances. We are of the view that the High Court misunderstood the scope of the observations in Saran Engineering Co.'s case [1986 (7) TMI 88 - SUPREME Court] and surmised that the observations quoted at page 748 will even cover cases, where the liability was not factually anticipated on the date of the preparation of the balance-sheet, but also will apply to cases, where the company "ought and can" anticipate on the date of the preparation of the balance-sheet. Decided in favour of the assessee
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