9911796707
TMI Blog1985 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e computing the capital base of the assessee, M/s. Ganganagar Sugar Mills Ltd., in the proceedings for the assessment year 1969-70 for assessment of surtax, the Income-tax Officer took into consideration reserve for redemption of debentures and for meeting bad and doubtful debts. After the completion of the surtax assessment, the Income-tax Officer initiated proceedings for rectification of his earlier order under section 13 of the Act of 1964 and held that the amounts kept apart by the company as reserves for redemption of debentures and for meeting bad and doubtful debts could not be treated as reserves, as these were provisions made by the company for meeting its liabilities. The Income-tax Officer was of the view that a mistake of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 256(1) of the Act was dismissed by the Tribunal on the ground that no question of law arose out of the order of the Tribunal, as in the view of the Tribunal, the question as to whether there was any mistake apparent on the record was one of fact. The Income-tax Officer in the first instance had accepted that the company had made reserves for redemption of debentures and for bad and doubtful debts and thereafter initiated proceedings under section 13 of the Act of 1964, which could have been taken only when the Income-tax Officer would have found that there was a mistake apparent from the record in the earlier assessment order. The provisions of section 13 of the Act of 1964 could not have been resorted to merely because of a change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e balance-sheet. On the other hand, reserves are appropriations of profits, the assets by which they are represented being retained to form part of the capital employed in the business. Provisions are usually shown in the balance-sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor's interest (see Spicer and Pegler's Book-keeping and Accounts, 15th edition, page 42). An amount set aside out of Profits and other surpluses, not designed to meet a liability, contingency, commitment or diminution in value of assets known to exist at the date of the balance-sheet is reserve but an amount set aside out of Profits and other surpluses to Provide f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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