Brief Facts of the Case and Question of Law
Brief Facts
For Assessment year 2006-07 the Tribunal while computing book profit under Section 115JB confirmed the addition of Rs. 9,80,00,000/- transferred to the special reserve pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934 under Clause (b) of the Explanation to Section 115JB. And for the Assessment year 2007-08 Tribunal,while computing book profit under Section 115JB confirmed the additions of :- (a) Rs. 16,00,00,000/- transferred to the special reserve pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934; and (b) Rs. 18,66,00,000/- transferred to the debt redemption reserve, both under Clause (b) of the Explanation to Section 115JB.
Question of Law
1. Whether reserve created as per the mandate of Section 45-IC of the Reserve Bank of India Act, 1934, is a liability or a reserve?
2. Whether the word “any reserve” as mentioned in clause (b) to Explanation 1 includes reserves includes reserves required to be made by other statues?
Contention of the Assessee
The contention of the appellant-assessee is two-fold.
Firstly, the reserve created as per the mandate of Section 45-IC of the Reserve Bank of India Act, 1934, is in fact a liability and not a reserve. Reliance is placed upon decision of:
