P.K. BADIANI vs THE COMMISSIONER OF INCOME TAX, BOMBAY

The Supreme Court held that under Section 2(6A)(e) of the Income Tax Act, 1922, the term 'accumulated profits' includes the development rebate reserve created by a company, which constitutes part of its commercial profits. The Court dismissed the appellant's appeal, affirming that the development rebate, although not part of assessable profits, is included in accumulated profits for the purpose of taxation. The ruling clarified that 'profits' in taxation law can vary in meaning based on context, emphasizing that accumulated profits refer to commercial profits rather than taxable profits.