https://www.taxtmi.com/caselaws?id=15952 For surtax computation under the Companies (Profits) Surtax Act, an amount credited out of profits is treated as a reserve where its substance shows no setting aside to meet an ascertained liability. The governing test is the true nature of the appropriation, assessed from the surrounding circumstances, the intention behind the fund, and its commercial purpose. On the facts described, the amount was created voluntarily, was not contractually required, was not earmarked against a specific repayment obligation, remained invested in the business, and was later moved to general reserve. It therefore qualified as a reserve and was includible in capital. en-us Tue, 18 Aug 1998 00:00:00 +0530 Mon, 31 Aug 2009 11:28:18 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=15952 For surtax computation under the Companies (Profits) Surtax Act, an amount credited out of profits is treated as a reserve where its substance shows no setting aside to meet an ascertained liability. The governing test is the true nature of the appropriation, assessed from the surrounding circumstances, the intention behind the fund, and its commercial purpose. On the facts described, the amount was created voluntarily, was not contractually required, was not earmarked against a specific repayment obligation, remained invested in the business, and was later moved to general reserve. It therefore qualified as a reserve and was includible in capital. Case-Laws Income Tax Tue, 18 Aug 1998 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=15952