2TATE BANK OF PATIALA, PATIALA vs COMMISSIONER OF INCOME TAX, PATIALA

The Supreme Court addressed the interpretation of 'reserves' under the Companies (Profits) Surtax Act, 1964, specifically Rules 1(xi)(b) and 1(iii) of the First and Second Schedules. The Court held that amounts set apart for bad and doubtful debts by the State Bank of Patiala qualify as reserves, thus entitling the bank to appropriate relief. The judgment of the High Court, which classified these amounts as provisions and denied relief, was overturned, affirming the Appellate Tribunal's decision.