https://www.taxtmi.com/caselaws?id=40156 For capital computation under the Companies (Profits) Surtax Act, 1964, capital had to be taken as on the first day of the previous year under rule 1 of the Second Schedule. Dividend recommended by directors and approved by shareholders in respect of profits of the relevant year was treated as a liability relating back to the year-end, so the character of the amount depended on substance rather than balance-sheet label. Amounts set aside to meet a known liability are provisions, while only sums retained out of profits without earmarked liability are reserves. On that basis, the dividend sum that had crystallised into liability was not includible in capital, and only the balance qualified as reserve. en-us Tue, 14 Jan 1992 00:00:00 +0530 Fri, 18 Jul 2014 14:45:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=40156 For capital computation under the Companies (Profits) Surtax Act, 1964, capital had to be taken as on the first day of the previous year under rule 1 of the Second Schedule. Dividend recommended by directors and approved by shareholders in respect of profits of the relevant year was treated as a liability relating back to the year-end, so the character of the amount depended on substance rather than balance-sheet label. Amounts set aside to meet a known liability are provisions, while only sums retained out of profits without earmarked liability are reserves. On that basis, the dividend sum that had crystallised into liability was not includible in capital, and only the balance qualified as reserve. Case-Laws Income Tax Tue, 14 Jan 1992 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=40156