https://www.taxtmi.com/caselaws?id=27795 Amounts appropriated from taxed profits and credited to a reserve account for possible repayment of an Industrial Finance Corporation loan were treated as reserves, not as provisions, for capital computation under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The governing distinction is that a reserve is money set aside for future use, whether for a general or specific purpose, while a provision is made against an accrued liability. On the facts, the reserve arose out of taxed profits, existed before the loan was actually taken, was not used for loan repayment, and was ultimately deployed for bonus shares. Accordingly, the amount was includible in the company's capital. en-us Tue, 30 Aug 1983 00:00:00 +0530 Tue, 16 Feb 2010 11:20:07 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=27795 Amounts appropriated from taxed profits and credited to a reserve account for possible repayment of an Industrial Finance Corporation loan were treated as reserves, not as provisions, for capital computation under rule 1(iii) of the Second Schedule to the Companies (Profits) Surtax Act, 1964. The governing distinction is that a reserve is money set aside for future use, whether for a general or specific purpose, while a provision is made against an accrued liability. On the facts, the reserve arose out of taxed profits, existed before the loan was actually taken, was not used for loan repayment, and was ultimately deployed for bonus shares. Accordingly, the amount was includible in the company's capital. Case-Laws Income Tax Tue, 30 Aug 1983 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=27795