https://www.taxtmi.com/caselaws?id=19803 A gratuity provision is treated as a provision for contingent liability and not as capital, so its disallowance under section 40A(7) does not alter its character for surtax capital base computation and it is excluded. By contrast, an amount retained as a reserve for doubtful debts is an appropriation of profits kept in the business as capital employed, so it retains the character of a reserve and is includible in the capital base. The note distinguishes between a mere provision for a liability and a genuine reserve out of profits for surtax purposes. en-us Mon, 04 Oct 1993 00:00:00 +0530 Mon, 09 Nov 2009 17:52:10 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=19803 A gratuity provision is treated as a provision for contingent liability and not as capital, so its disallowance under section 40A(7) does not alter its character for surtax capital base computation and it is excluded. By contrast, an amount retained as a reserve for doubtful debts is an appropriation of profits kept in the business as capital employed, so it retains the character of a reserve and is includible in the capital base. The note distinguishes between a mere provision for a liability and a genuine reserve out of profits for surtax purposes. Case-Laws Income Tax Mon, 04 Oct 1993 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=19803