1969 (2) TMI 23 - HC - Income Tax

Assessee company had created a reserve against the possible liability that may arise due to guaranteeing of debts of subsidiary company - the subsidiary company went into liquidation - held that, this reserve is excludible in the computation of commercial profits for the purpose of section 23A

Summary

The High Court of Madras ruled on the interpretation of section 23A of the Income-tax Act, 1922. The court found that a liability reserve created by the assessee for potential debts was justified and should be excluded from commercial profits. The court ruled in favor of the assessee regarding the sum of Rs. 60,000 but against them on other aspects.