COMMISSIONER OF INCOME TAX, KANPUR vs THE ELGIN MILLS LTD., KANPUR

The Supreme Court addressed the computation of 'standard deductions' under the Companies Profits (Surtax) Act, 1964, specifically regarding the classification of investment reserve, rehabilitation reserve, and forfeited dividend reserve. The Court upheld the High Court's decision that investment and rehabilitation reserves qualify as reserves under the Act, but reversed the classification of forfeited dividend reserve, affirming it does not constitute a reserve. The ruling clarifies the distinction between 'provision' and 'reserve' in tax law, referencing the precedent set in Vazir Sultan Tobacco Co. Ltd. v. Commissioner of Income Tax.