| Case ID |
0f68b431-ef53-457e-afc1-2681ec5015d8 |
| Body |
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| Case Number |
D-2741 of 2016 |
| Decision Date |
Jan 01, 1987 |
| Hearing Date |
Jan 01, 1987 |
| Decision |
The Tribunal upheld the AAC's order, concluding that the sum of Rs. 26,342, though described as a provision for contingencies, must be regarded as a reserve. The court ruled that there was no specific liability against which the amount could be set aside, thus affirming that it was indeed a reserve available for other purposes. The decision emphasized that the nature of the appropriation should be examined, and the mere classification in the balance sheet does not determine its true nature. The finding concluded that the appropriation's classification as a provision did not alter its availability for use by the assessee since there were no ascertained liabilities. The ruling answered in favor of the assessee, allowing the inclusion of the said amount in the capital computation for surtax purposes. |
| Summary |
This case revolves around the interpretation of provisions under the Companies (Profits) Surtax Act, 1964, specifically concerning the treatment of a provision made by Shaw Wallace & Co. Ltd. for contingencies. The crux of the matter was whether the amount set aside should be classified as a reserve or a provision. The court emphasized the importance of the actual use and availability of the funds rather than their labeling in accounting records. The decision highlights key legal principles regarding the classification of financial provisions, which is critical for tax computations in corporate law. Keywords include corporate tax, surtax, provisions vs reserves, accounting principles, and financial liabilities, all of which are essential for understanding corporate financial reporting and compliance. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
Dipak Kumar Sen,
Monjula Bose
|
| Lawyers |
B.K. Bagchi,
Sunil Mukherjee,
Miss M. Seal
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Shaw Wallace & Co. Ltd.
|
| Citations |
1987 SLD 3380,
(1987) 167 ITR 27
|
| Other Citations |
CIT v. Jugantar (P.) Ltd. [1981] 128 ITR 619 (Cal.),
Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559 (SC),
CIT v. Hindustan Lever Ltd. [1986] 160 ITR 700 (Bom.),
Braithwaite & Co. (India) Ltd. v. CIT [1978] 111 ITR 825 (Cal.),
CIT v. Indian Standard Wagon Co. Ltd. [1979] 116 ITR 539 (Cal.),
CIT v. Laxmi Sugar and Oil Mills Ltd. [1986] 161 ITR 168 (SC)
|
| Laws Involved |
Companies (Profits) Surtax Act, 1964
|
| Sections |
Not available
|