1969 (2) TMI 23

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....e the same and the questions are: " 1. Whether, on the facts and circumstances of the case, the provisions of section 23A of the Income-tax Act, 1922, are attracted ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the commercial profit to be considered is Rs. 84,050 and the tax to be taken into account is Rs. 39,000? 3. Whether, on the....

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....hat the Tribunal was right in taking this amount into account in computing the commercial profits. The other amount, in our view, stands on a different footing. The assessee's business is peculiar which includes furnishing guarantee to debts borrowed by subsidiary companies. One of such companies having gone into liquidation, the assessee anticipated that a guarantee furnished by it for the equ....

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....tions or were unreasonable in setting apart the reserve to meet the possible liability. In our opinion, it is not necessary that, in order to exclude from computation of commercial profits, the reservation should always be in respect of a definite ascertained loss or liability. There may be circumstances which may warrant a reserve against possible liability which will have to be excluded in the c....