https://www.taxtmi.com/caselaws?id=7255 A reserve of Rs. 50,000 set aside for roads was not deductible because it was not shown to arise from any undertaking incorporated in the sale deeds, and no expenditure had actually been incurred in the relevant or subsequent year. The amount was treated only as a provision for possible future outlay that the assessee could postpone or avoid, so it was not an existing liability enforceable in law. In mercantile accounting, deduction is allowed only for liabilities that are existing, ascertained and legally enforceable, not for contingent reserves. The amount was therefore disallowed as a deduction. en-us Mon, 10 Jul 1967 00:00:00 +0530 Mon, 16 Feb 2009 11:56:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=7255 A reserve of Rs. 50,000 set aside for roads was not deductible because it was not shown to arise from any undertaking incorporated in the sale deeds, and no expenditure had actually been incurred in the relevant or subsequent year. The amount was treated only as a provision for possible future outlay that the assessee could postpone or avoid, so it was not an existing liability enforceable in law. In mercantile accounting, deduction is allowed only for liabilities that are existing, ascertained and legally enforceable, not for contingent reserves. The amount was therefore disallowed as a deduction. Case-Laws Income Tax Mon, 10 Jul 1967 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=7255