https://www.taxtmi.com/caselaws?id=20594 The true nature of an appropriation determines whether it is a reserve or a provision: an amount set apart for a known liability of uncertain quantum is a provision, while an amount retained for an unforeseen or unknown contingency is a reserve. Applying that test, the contingency reserve was found not to have been created to meet an existing or known liability, because bonus liability had been separately provided for each year. The balance therefore retained the character of a reserve and was includible in the capital base under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964. en-us Tue, 23 Apr 1991 00:00:00 +0530 Mon, 16 Nov 2009 10:24:21 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=20594 The true nature of an appropriation determines whether it is a reserve or a provision: an amount set apart for a known liability of uncertain quantum is a provision, while an amount retained for an unforeseen or unknown contingency is a reserve. Applying that test, the contingency reserve was found not to have been created to meet an existing or known liability, because bonus liability had been separately provided for each year. The balance therefore retained the character of a reserve and was includible in the capital base under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964. Case-Laws Income Tax Tue, 23 Apr 1991 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=20594