TMI Blog1990 (1) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... Co-operative Society, JVPD Scheme,Bombay. The amount was shown as payable for the services rendered as under: (1) From21st Oct., 1980to30th Sept., 1981Rs. 1,20,000 (2) From1st Oct., 1981to30th Sept., 1982Rs. 1,80,000 The Assessing Officer disallowed the claim of Rs. 1,80,000 as he was not satisfied that M/s Rashmi Trading Co. had rendered any services which would entitle them to the payment of Rs. 1,80,000. The claim of Rs. 1,20,000 was disallowed as it pertained to the preceding year. The Assessing Officer was also guided in disallowing the claim by the fact that no payment had been made to Rashmi Trading Co. till the end of the accounting period. The CIT(A) on consideration of evidence was satisfied that services were rendered by M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of services by M/s. Rashmi Trading Co. to the assessee company which had not been incorporated till21st Oct., 1980. The learned counsel contended that there was no office of the assessee company atBombayand it was also not financially viable for the company to open an office atBombay. The services of M/s Rashmi Trading Co. were accordingly utilised till the end of September, 1986, when the company was in a position to station one Director and two engineers atBombayand when the agreement with M/s Rashmi Trading Co. was terminated. The learned counsel accordingly urged that there should be no dispute with regard to allowance of a deduction in respect of Rs. 1,80,000 which relates to the year under appeal as the liability has accrued during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that income arose out of an earlier transaction". 5. On the basis of the authority quoted above, the learned counsel has contended that when an income is to be assessed only when the right accrues, on the same analogy, the liability is to be allowed in the year in which the payee acquired the right to receive the amount. The learned counsel has further relied on Nonsuch Tea Estate Ltd. vs. CIT 1975 CTR (SC) : (1975) 98 ITR 189 (SC) in support of his contention. 6. We have given our careful consideration to the rival contentions and have perused the records. The CIT(A) on consideration of relevant evidence has been satisfied that services were rendered by M/s Rashmi Trading Co. to the appellant company and that the payments have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enable my company to start its operations inBombayis a very good sign. I think we can cooperate on mutually agreeable terms. I have one observation to make on your terms. For a new company, which is unable to participate financially or to take heavy liabilities, I find your service charges on the higher side. You will appreciate that although I will not be in a position to remunerate you right from start, I do wish to compensate you as soon as possible. On that account, I will be morally obligated to you and shall consider it a personal liability which should be cleared as early as I am able to. Therefore, I propose that you reduce your charges by Rs. 5,000 per month only. Should you agree to this, I would reckon that our business relation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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