COMMISSIONER OF INCOME TAX, KANPUR vs SARAN ENGINEERING CO. LTD.

The Supreme Court held that under the Super Profits Tax Act, 1963, capital reserves, stocks and stores reserves, bad and doubtful debts reserves, loans and insurance reserves, investment reserves, and rehabilitation reserves are to be included in the computation of capital, except for obsolescence reserves and forfeited moneys reserves. The Court clarified that a liability that has not yet arisen cannot be treated as a reserve. The appeals were allowed in part, and the Special Leave Petition was dismissed.