https://www.taxtmi.com/caselaws?id=28932 For surtax capital computation, an amount standing to the credit of profit and loss account is treated as a reserve only if, in substance, it has been appropriated for business use and is not retained as a provision for a known liability or anticipated loss. The distinction turns on the substance, purpose, and the directors' intention as reflected in the accounts. On the facts, the first year's surplus was an unallocated balance after specific provisions, with no earmarking for any contingency, while the second year's surplus had been merged with general reserve in the directors' report and accounts, showing appropriation from the start of the new accounting period. The surplus was therefore included in capital computation. en-us Mon, 16 Nov 1981 00:00:00 +0530 Mon, 08 Mar 2010 17:05:13 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=28932 For surtax capital computation, an amount standing to the credit of profit and loss account is treated as a reserve only if, in substance, it has been appropriated for business use and is not retained as a provision for a known liability or anticipated loss. The distinction turns on the substance, purpose, and the directors' intention as reflected in the accounts. On the facts, the first year's surplus was an unallocated balance after specific provisions, with no earmarking for any contingency, while the second year's surplus had been merged with general reserve in the directors' report and accounts, showing appropriation from the start of the new accounting period. The surplus was therefore included in capital computation. Case-Laws Income Tax Mon, 16 Nov 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=28932