THE COMMISSIONER OF EXCESS PROFITS TAX, WEST BENGAL vs THE RUBY GENERAL INSURANCE CO. LTD.

The Supreme Court ruled that reserves for unexpired risks on pending insurance policies cannot be deducted as an accruing liability under rule 2 of Schedule II of the Excess Profits Tax Act, 1940. The Court held that such reserves do not constitute a debt as they are contingent liabilities and do not affect the real trading assets of the business. Consequently, the appeal by the Commissioner for Excess Profits Tax was dismissed, affirming the High Court's decision.