TaxTMI 
TaxTMI 
1982 (5) TMI 19
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.... Act, 1964 ? 2. Whether, on the facts and in the circumstances of the case, and on a proper understanding of the principle laid down by the Supreme Court in the case of Metal Box Company of India Ltd. v. Their workmen [1969] 73 ITR 53; 39 Comp Cas 410, the Tribunal was right in holding that the amount shown as reserve for loss on future contracts was not in the nature of a provision made against anticipated losses and contingencies ? " The references arise under the C.(P.)S.T. Act, 1964, for the assessment years 1966-67 and 1967-68, for which the previous years were 31st October, 1965 and 1966, respectively. The assessee is a manufacturer of lead and chemicals. Its practice was to enter into forward contracts with its customers at certain....
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....dule to the Act for the purpose of computation of capital. It was stated that the assessee who was a manufacturer of red lead and litharge had to create a reserve for loss relating to unexpired contracts at the end of each accounting year as the market in these two products fluctuated considerably. The AAC, relying on the Explanation to r. 1, referred to above, held that what the assessee had claimed was nothing but provision for a contingent liability which could not be ascertained when the accounts were closed. He, therefore, agreed with ITO that the amounts in question in the two years could not be considered as reserves and, therefore, the claim that they should be included in the computation of capital was rightly rejected by the ITO. ....