9911796707
TMI Blog1982 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1964. The facts giving rise thereto are straight and simple. For the assessment years 1971-72 and 1972-73, the petitioner-Corporation filed its returns under s. 5 of the aforesaid Act. The returns were based in accordance with the charging s. 4. The ITO framed two assessment orders against the petitioner. The petitioner did not choose to file appeals therefrom to the AAC. However, before the expiry of the period of one year, it filed two revision petitions before the Commissioner under s. 17 of the Act. In the grounds of revision, which are a part of this record as annexs. R-3 and R-4, the petitioner claimed that for the assessment year 1971-72, it had made a reserve of a sum of Rs. 10,000 on account of " Price Stabilisation Reserve " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a ' provision ' whereas a 'reserve' is created without any contemplation to meet any liability, contingent or otherwise. The Supreme Court's observations in question set at rest all the speculation whatsoever on the point at issue. The amounts claimed by the petitioner to be deductible for the purposes of computation of chargeable Profits are of the nature of 'provisions' and as such are not to be taken into account for working out the chargeable profits. " The petitioner, challenging the aforesaid common order to both the revision petitions, maintains that though the Commissioner has noticed the distinction drawn by the Supreme Court with regard to " provision " and " reserve " , has not applied the distinction to the three Categories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tingencies are charges against profits, and, therefore, to be taken into account against gross receipts in the P L account and the 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 Edn, p. 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 know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in a sense there has been no establishment of facts. The power of revision under s. 17 of the Act, vesting in the Commissioner, is also circumscribed by the language employed therein, for, the Commissioner has to call for and examine the records of any proceedings under the Act, which has been taken by an officer of subordinate jurisdiction. In other words, he is a " court of error " for the purpose of the Act. If he detects an error committed by a subordinate officer he has been given the right to correct it and pass such order in relation thereto as he thinks fit, on the file. Here, it seems that the Commissioner entertained the plea of the petitioner, as he claims, in the interest of justice, i. e., on the supposition that these pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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