Development rebate reserve requirement narrowed; only the substitution of other statutory reserves is disallowed, other concessions retained. Circular No.189 clarifies that the Supreme Court decision in Indian Overseas Bank supersedes only the Board's earlier instruction that certain statutory reserves could stand as a development rebate reserve. The Board affirms that the prior positions that no statutory reserve is required when income before rebate is a loss, and that genuine non-deliberate deficiencies may be condoned if rectified by creating an adequate reserve in the assessment year, remain operative; field officers' broader withdrawal of those positions was incorrect.
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Development rebate reserve requirement narrowed; only the substitution of other statutory reserves is disallowed, other concessions retained.
Circular No.189 clarifies that the Supreme Court decision in Indian Overseas Bank supersedes only the Board's earlier instruction that certain statutory reserves could stand as a development rebate reserve. The Board affirms that the prior positions that no statutory reserve is required when income before rebate is a loss, and that genuine non-deliberate deficiencies may be condoned if rectified by creating an adequate reserve in the assessment year, remain operative; field officers' broader withdrawal of those positions was incorrect.
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