TMI Blog1993 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion : " 1. Whether, on the facts and in the circumstances of the case, an amount of Rs. 63,304 forming part of the gratuity provision which was not considered as allowable deduction while computing the total income would qualify for inclusion in the capital base ? 2. Whether, on the facts and in the circumstances of the case, an amount of Rs. 75,000 should be considered as a reserve liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that ordinarily an appropriation to gratuity reserve will have to be regarded as a provision made for a contingent liability, for, under a scheme framed by a company, the liability to pay gratuity to its employees on determination of employment arises only when the employment of the employee is determined by death, incapacity, retirement or resignation--an event (cessation of employment) certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 75,000 is for doubtful debts. It is also not disputed that the said amount of Rs. 75,000 is not considered as bad debts and not included in computing the profits for the purpose of the Income-tax Act. That means, the amount is kept as other reserve. These reserves are appropriation of profits and are being retained in the form of capital employed in the business. In this view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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