https://www.taxtmi.com/caselaws?id=40250 The distinction between a provision and a reserve under the surtax law depends on substance, purpose, and surrounding circumstances, not merely on how the amount is appropriated in the accounts. A provision is a charge against profits made to meet a known liability or diminution in asset value, while a reserve is an appropriation of profits retained as part of capital employed. Amounts set aside to meet a loan liability, rather than to acquire an asset or strengthen capital, are treated as provisions. On that basis, the amount in the loan redemption reserve was held to be a provision and not a reserve, so it could not be included in capital for surtax computation. en-us Thu, 07 Dec 2000 00:00:00 +0530 Fri, 27 Jun 2014 23:51:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=40250 The distinction between a provision and a reserve under the surtax law depends on substance, purpose, and surrounding circumstances, not merely on how the amount is appropriated in the accounts. A provision is a charge against profits made to meet a known liability or diminution in asset value, while a reserve is an appropriation of profits retained as part of capital employed. Amounts set aside to meet a loan liability, rather than to acquire an asset or strengthen capital, are treated as provisions. On that basis, the amount in the loan redemption reserve was held to be a provision and not a reserve, so it could not be included in capital for surtax computation. Case-Laws Income Tax Thu, 07 Dec 2000 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=40250