https://www.taxtmi.com/caselaws?id=29033 An amount set apart in a balance-sheet as gratuity reserve is includible in capital base under the Super Profits Tax Act only if it is truly a reserve and not a provision. A reserve is an appropriation of profits retained as capital, while a provision is a charge against profits made for a known or foreseeable liability. Gratuity liability is a definite business liability; an ad hoc gratuity appropriation or an amount based on actuarial valuation is generally a provision. Only any excess over the actuarially determined liability can qualify as reserve. On the stated facts, the nature of the sum was not established, and the view treating it as reserve could not be sustained. en-us Tue, 17 Nov 1981 00:00:00 +0530 Wed, 10 Mar 2010 13:23:14 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=29033 An amount set apart in a balance-sheet as gratuity reserve is includible in capital base under the Super Profits Tax Act only if it is truly a reserve and not a provision. A reserve is an appropriation of profits retained as capital, while a provision is a charge against profits made for a known or foreseeable liability. Gratuity liability is a definite business liability; an ad hoc gratuity appropriation or an amount based on actuarial valuation is generally a provision. Only any excess over the actuarially determined liability can qualify as reserve. On the stated facts, the nature of the sum was not established, and the view treating it as reserve could not be sustained. Case-Laws Income Tax Tue, 17 Nov 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=29033