https://www.taxtmi.com/caselaws?id=20438 Amounts set aside in accounts must be classified by their real character, not by the label used by the assessee. A provision exists where the sum is made against a known or existing liability, whereas amounts retained for future contingencies without any crystallised liability are reserves. Applying this distinction, sums provided for doubtful debts and doubtful advances were treated as reserves rather than provisions, because they were set apart against possible future losses and not against a present liability. They therefore formed part of the company's capital for surtax computation, and the issue was answered in favour of the assessee. en-us Mon, 13 Sep 1993 00:00:00 +0530 Sat, 14 Nov 2009 10:17:35 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=20438 Amounts set aside in accounts must be classified by their real character, not by the label used by the assessee. A provision exists where the sum is made against a known or existing liability, whereas amounts retained for future contingencies without any crystallised liability are reserves. Applying this distinction, sums provided for doubtful debts and doubtful advances were treated as reserves rather than provisions, because they were set apart against possible future losses and not against a present liability. They therefore formed part of the company's capital for surtax computation, and the issue was answered in favour of the assessee. Case-Laws Income Tax Mon, 13 Sep 1993 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=20438