9911796707
TMI Blog1993 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... apital of the assessee-company under rule I of the Second Schedule to the Super Profits Tax Act, 1963: (Rs) (i) Amount set apart for contingent liability (taxation) 4,50,000 (ii) Amount set apart for proposed dividend 19,90,000 (iii) Reserve for depreciation fund in excess of the amount allowed as depreciation in income-tax 6,77,122 (iv) Excess provision in revenue accounts disallowed in income-tax assessment for the assessment years. 3,61,876 Though the question refers to four items, we are concerned in this appeal only with the first item. We shall, therefore, state the facts only in so far as they are relevant to the said item. The assessee is a private limited company. The assessment year concerned is 1963-64. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by the assessee relating to the subsequent assessment year (1964-65) was also before the Tribunal. That appeal arose under the provisions of the Companies Profits Surtax Act, 1964, which replaced the Super Profits Tax Act. The Tribunal first disposed of the appeal relating to the assessment year 1964-65. In so far as the item in question is concerned it held that it was a reserve. Following the said judgment, the appeal pertaining to the assessment year 1963-64 was also allowed. ( It may be stated that the order of the Tribunal relating to assessment year 1964-65 was subsequently rectified by an order dated February 15, 1972, and the said item was held to be a provision. But no such order was passed with respect to the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed in the business. Provisions are usually shown in the balance-sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor's interest. (See Spicer and Pegler's Book Keeping and Accounts, Fifteenth edition, at page 42 ). " While approving the said statement, it was stated in Vazir Sultan [1981] 132 ITR 559, 569 (SC) : "In other words the broad distinction between the two is that whereas a provision is a charge against the profits to be taken into account against gross receipts in the profit and loss account, a reserve is an appropriation of profits, the asset or assets by which it is represented being retained to form part of the capital emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
