COMMISSIONER OF INCOME TAX v. PUNJAB NATIONAL BAMK LTD
[Citation -1984-LL-0509]

Metadata

Citation 1984-LL-0509
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name PUNJAB NATIONAL BAMK LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 09/05/1984
Assessment Year 1970-71
Judgment View Judgment
Keyword Tags credit balance
Bot Summary: JUDGMENT JUDGMENT The judgment of the court was delivered by D. K. KAPUR J.-At the instance of the Commissioner of Income-tax, the following questions have been referred to us under section 256(1) of the Income- tax Act, 1961, for the assessment year 1970-71: 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the amount of Rs. 78,00,000 transferred to an account styled as'contingency reserve' represented a reserve and was deductible from chargeable profits under the Companies Surtax Act, 1964 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the amount of Rs. 84,16,116 being the credit balance in an account styled as'contingency reserve' should be treated as a reserve as on the first day of the previous year in computing the capital of the company for the purposes of the Companies Surtax Act, 1964 Similar questions except for the amounts have arisen in past years also. For the assessment year 1963-64, a reference made in respect of the super profits tax assessment of this assessee, the Punjab National Bank Ltd., involved similar questions. It was held that the sums credited in contingency reserve, charity reserve and other similar amounts were reserves as they did not relate to any real existing liability. The amounts transferred to contingency reserve are reserves. They have to be treated as such for the purpose of the Companies Surtax Act, 1964.

Judgment



JUDGMENT JUDGMENT judgment of court was delivered by D. K. KAPUR J.-At instance of Commissioner of Income-tax, following questions have been referred to us under section 256(1) of Income- tax Act, 1961, for assessment year 1970-71: " 1. Whether, on facts and in circumstances of case, Appellate Tribunal was correct in holding that amount of Rs. 78,00,000 transferred to account styled as'contingency reserve' represented reserve and was deductible from chargeable profits under Companies (Profits) Surtax Act, 1964? 2. Whether, on facts and in circumstances of case, Appellate Tribunal was correct in holding that amount of Rs. 84,16,116 being credit balance in account styled as'contingency reserve' should be treated as reserve as on first day of previous year in computing capital of company for purposes of Companies (Profits) Surtax Act, 1964? " Similar questions except for amounts have arisen in past years also. For assessment year 1963-64, reference made in respect of super profits tax assessment of this assessee, Punjab National Bank Ltd., involved similar questions. It was held that sums credited in contingency reserve, charity reserve and other similar amounts were " reserves " as they did not relate to any real existing liability. Similar situation exists in present assessment. Following that judgment, we answer questions referred to us in affirmative. amounts transferred to contingency reserve are " reserves ". They have to be treated as such for purpose of Companies (Profits) Surtax Act, 1964. Parties will bear their own costs. *** COMMISSIONER OF INCOME TAX v. PUNJAB NATIONAL BAMK LTD.
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