https://www.taxtmi.com/caselaws?id=29534 A premium and discount account kept as a secret reserve and omitted from the published balance-sheet can be treated as a reserve for inclusion in capital base if it is specifically appropriated by the competent authority. The governing test is that a reserve must be earmarked as such and not merely represent carried-forward surplus or undistributed profits. In the banking context, the statutory framework recognises reserves that may not appear in the published balance-sheet, and board-level allocation of profits may be sufficient. On the facts, the account reflected a deliberate hidden reserve created by valuation below market value, so the amount was includible in capital base. en-us Tue, 21 Apr 1981 00:00:00 +0530 Sat, 13 Mar 2010 16:02:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=29534 A premium and discount account kept as a secret reserve and omitted from the published balance-sheet can be treated as a reserve for inclusion in capital base if it is specifically appropriated by the competent authority. The governing test is that a reserve must be earmarked as such and not merely represent carried-forward surplus or undistributed profits. In the banking context, the statutory framework recognises reserves that may not appear in the published balance-sheet, and board-level allocation of profits may be sufficient. On the facts, the account reflected a deliberate hidden reserve created by valuation below market value, so the amount was includible in capital base. Case-Laws Income Tax Tue, 21 Apr 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=29534