Bombay High Court
Commissioner Of Income-Tax vs South India Insurance Co. Ltd. on 12 December, 1988
Equivalent citations: [1992]193ITR774(BOM)
Author: S.P. Bharucha
Bench: S.P. Bharucha
JUDGMENT S.P. Bharucha, J.
1. Three questions arise at the instance of the Revenue and they read thus :
"(i) Whether the general reserves and taxation reserves are allowable expenditure ?
(ii) If question No. 1 is answered in the affirmative, whether such expenditure or allowance would categorically be covered by sections 30 to 43A of the Income-tax Act, 1961 ?
(iii) Whether the taxation reserve or general reserve is liable to be added back under rule 5 (a) of the First Schedule to the Income-tax Act, 1961 ?"
The reference arises for the assessment years 1969-70, 1970-71 and 1971-72. Virtually, identical questions arose in I. T. R. No. 182 of 1971 in respect of the same assessee for the assessment years 1962-63 and 1963-64. That reference (I. T. R. No. 182 of 1971) was decided on August 27, 1981. Following that judgment, the first question before us is answered thus : Neither the taxation reserve nor the general reserve can be considered to be an allowance or an expenditure. In the circumstances, the second question does not arise. The third question is answered in the negative and in favour of the assessee.
2. No order as to costs.