TMI Blog1983 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 10-3-1977. The assessee filed its return showing an income of Rs. 14,18,69,048. Further, the assessee, in a covering letter, stated that according to the knowledge of the assessee no income has escaped assessment for the year 1972-73. The ITO found that the assessee was allowed incorrect relief under Section 80M of the Act which was discovered in course of audit. The ITO having in mind the decision in Addl. CIT v. Cloth Traders (P.) Ltd. [1974] 97 ITR 140 (Guj.) rejected the contention of the assessee. The assessee came in appeal before the Commissioner (Appeals) and contended that the action of the ITO under Section 147(b) was illegal. The Commissioner (Appeals) did not accept the argument of the assessee. He observed as follows: The first four grounds of appeal relate to the reopening of the assessment under Section 147(b) of the Income-tax Act, 1961. It is claimed that the reopening is not justified. The reopening has been done in consequence of information received from the revenue audit. It has been held by the Supreme Court in the case of R.K. Malhotra, ITO v. Kasturbhai Lalbhai [1977] 109 ITR 537 that a note received from the revenue audit would constitute 'i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malhotra, ITO [1971] 80 ITR 188 the decision of the Gujarat High Court was in favour of the assessee in which it was held that the opinion of the audit about correct state of law was not an information. Subsequently, the decision in Kasturbhai Lalbhai's case (supra) on which the reliance was placed by the Commissioner (Appeals) was reversed [by] the Supreme Court in Indian Eastern Newspaper Society's case (supra). Shri P.T. Sanyal, therefore, urged that the assessment made by the ITO pursuant to notice under Section 148 is illegal. 3. Shri A. Sengupta, the standing counsel of the department, on the other hand, contended that the assessment was not reopened on the opinion of the audit. The audit only suggested that the assessment has not been correctly made by the ITO and the ITO only took into consideration the decision in Cloth Traders (P.) Ltd.'s case (supra) which was pronounced on 28-11-1973 but it was reported in the later part of 1974 after July 1974 in the ITR. He further distinguished the case of the assessee in Darbhanga Marketing Co. Ltd.'s case (supra) and stated that the case was not based upon the provisions of Section 80M. It was further stated relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led and is reproduced below: Extract of IAC Audit Range III's comments in respect of audit objection of United Bank of India. Assessment year 1971-72. 'Board have taken the view that the relief is admissible only on net amount of dividend. In many cases we have gone up to High Court/Supreme Court in appeal against adverse decisions regarding relief admissible under Section 80M, etc. So ask ITO to take remedial action immediately under Section 263 for which the limitation period is expiring on 24-3-1976.' Sd/-N.K. Ganguly 25-2-1976, IAC, Audit Range-III, Calcutta. It is evident from the reasons recorded by the ITO that Section 147 was taken on the basis of the information conveyed by the IAC. In the note, no doubt reference has been made to the decision of the High Court. But the High Court decision in Cloth Traders (P.) Ltd.'s case (supra) mentioned in the assessment order had not been indicated in the note forwarded by the IAC. The action under Section 147(b) could be taken if the ITO has reason to believe that income has escaped assessment and it should be in consequence of information received after the original assessment. The Supreme Court in Sheo Nath Singh v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Section 147(b). The view expressed by the standing counsel is supported by the decision of the Supreme Court in R.B. Bansilal Abirchand Firm v. CIT [1968] 70 ITR 74 in which it was said that the decision of the Tribunal or High Court as to which assessable entity is chargeable in respect of a particular income will constitute 'information'. But the question is that when the ITO completed the original assessment on 25-7-1974, the decision in favour of the assessee was available in Darbhanga Marketing Co. Ltd.'s case (supra), Madras Motor General Insurance Co. Ltd.'s case (supra) and New Great Insurance Co. Ltd.'s case (supra) whereas the decision against the assessee was in Cloth Traders (P.) Ltd.'s case (supra). The assessee was under the jurisdiction of the Calcutta High Court. The decision of the Calcutta High Court was binding upon the assessing officer as well as on the assessee. See the decision of the Calcutta High Court in Raja Benoy Kumar Sahas Roy v. CIT [1953] 24 ITR 70 which was affirmed by the Supreme Court in CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466. The decision of the Calcutta High Court was available in Darbhanga Marketing Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer to the assessee to have its reply--Export Enterprises (P.) Ltd. v. ITO [1983] 142 ITR 641 (Cal.). Therefore, the conclusion arrived at earlier would not be affected by the above argument of the standing counsel. 6. It has been concluded earlier that the reassessment made by the ITO under Section 147(b) was illegal. However, it would not be fair to rest upon the above conclusion and it would be in the interest of the assessee as well as the revenue, that the Tribunal must give its finding on merits on various grounds of the assessee and the department. Before the grounds of the assessee and the revenue are taken up, a preliminary objection was raised by Shri P.T. Sanyal that only such income which escaped assessment could be taken into consideration by the assessing officer, but the assessing officer could not have taken action in respect of other matters which were finally decided. He relied on the decision in Hiralal v. CIT [1980] 121 ITR 89 (Raj.). The standing counsel, on the other hand, urged that once the assessment was reopened, all the income that escaped assessment can be brought to tax irrespective of the fact that action was taken for a particular income which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment was framed. At the same time, the assessee can make fresh claim for exemption and deduction which were not made earlier. The confusion starts because, while making the reassessment the ITO takes some of the income as assessed under the original assessment. It is a matter of convenience that the ITO does not disturb those items for which he did not have hesitation in accepting that those items had correctly been computed even earlier and, therefore, he adopts those figures in the reassessment. But it does not mean that the superstructure of the earlier assessment stands partially whereas fresh structure is erected for those items which escaped assessment. Therefore, following the decision of the Supreme Court in V. Jaganmohan Rao's case (supra) it is concluded that once the assessment was reopened under Section 147(b), it was open to the ITO to bring all the items which escaped assessment. But it was also open to the assessee to put claim for deductions and/or exemptions which were not claimed in the original assessment. 9. The next objection of the assessee is about the inclusion of interest of Rs. 24,94,717 for the assessment year 1972-73 and Rs. 96,19,928 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our Mills (P.) Ltd. v. CIT [1978] 114 ITR 227 (Cal.), Fatehchand Firm Chhakodilal v. CIT [1945] 13 ITR 198 (Nag.), CIT v. M.A.L. Chettiyar Firm [1935] 3 ITR 193 (Rangoon), Indo-Commercial Bank Ltd. v. CIT [1962] 44 ITR 22 (Mad.) and Forest Industries Travancore Ltd. v. CIT [1964] 51 ITR 329 (Ker.). The assessee also relied in the order of the Bangalore Bench of the Tribunal dated 25-10-1978. The Commissioner (Appeals) did not agree with the view of the assessee and further placed reliance on State Bank of Travancore's case (supra) on the basis of which he came to the conclusion that the interest credited to the suspense account was liable to tax. Thereafter the Commissioner (Appeals) proceeded to consider whether the assessee can change its method of accounting for bona fide reason. He observed that in the present case, the right of the assessee to change its method of accounting was not being questioned. The question for consideration was whether income had actually accrued under the provisions of the Act. He stated that where the debts had not been written off, and the interest was credited to the suspense account according to the system of accounting followed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the heads interest, commission, etc., would not be assessable to tax. He further urged that the circular of 1952 was withdrawn only in 1978. Therefore, the circular was in existence during the assessment years 1972-73 and 1975-76. The Kerala High Court in CIT v. B.M. Edward, India Sea Foods [1979] 119 ITR 334 (FB) held that the circular issued by the CBDT as it stood at the beginning of the assessment year would be applicable and the subsequent modification of the circular would have no relevancy. The above circular was followed in the case of CIT v. Geeva Films [1983] 141 ITR 632 (Ker.). The department went in special leave before the Supreme Court and the Supreme Court dismissed the special leave petition. The necessary papers are filed by the assessee at pages 8 to 31 of the second paper book. Therefore, Shri P.T. Sanyal urged that even following the circular of 1952 which was in existence in these two years, the interest credited to suspense account could not have been charged to tax. The third argument of Shri P.T. Sanyal was that the assessee was following this system on the basis of circular of 1952 of the CBDT since long and the department had accepted it. It was cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e IAC as well as the Commissioner (Appeals) specifically for this purpose to show that there is no finding to this effect. Rather the Commissioner (Appeals) has observed that so long as there is a ray of hope of realisation, the debt cannot be treated as bad debt. He distinguished the case cited by the assessee in CIT v. Raigharh Jute Mills Ltd. [1981] 132 ITR 702 (Cal.). 13. Shri P.T. Sanyal, the counsel for the assessee, urged that the assessee can change its method of accounting and the decision cited by the standing counsel in James Finlay Co.'s case (supra) is on a different point and, therefore, the same could not be applicable to the facts of the present case. It was further stated that the decision in James Finlay Co.'s case (supra) was delivered on 22/23-12-1980, whereas the decision in Raigharh Jute Mills Ltd.'s case (supra) was delivered on 28-7-1981. The latter decision is in favour of the assessee. Shri P.T. Sanyal relied on the commentary of Kanga and Palkhivala's Income-tax, Supplement to Seventh Edition at page I 168. 14. The assessee has not included the interest on sticky advances in its total income. The interest charged on sticky advances has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been returned by the assessee. The assessee was a banker and the income from security was returned by the assessee which was subsequently considered to be exempted. The plea was taken that the income had been returned by the assessee and, therefore, it was rightly taxed. The Supreme Court observed that nothing turns on the return. The principle that 'the Crown is not entitled to take a mere book entry as conclusive evidence of the existence of a profit' was observed in Doughty v. Taxes Comr. [1927] AC 327, 336 (PC). Similar observation was made by the Supreme Court in Shoorji Vallabhdas Co.'s case (supra) at page 148. The concept of real income was considered by the Supreme Court in Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521: . . . Income-tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Income-tax Act. The real profit can be ascertained only by making the permissible deductions. There is a clear-cut distinction between deductions made for ascertaining the profits and distributions made out of profits. In a given case whether the outgoings fall in one or the other of the heads is a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... postponed because the assessee shall not add profit by mere book entry. Therefore, if the debt is doubtful itself, no prudent commercial man will charge interest and inflate his profit and pay tax to the State which is not due. It may be clarified by examples. If an assessee deals in money-lending and unfortunately major portion of the loans had become sticky and are not reliable finally. The assessee follows mercantile method of accounting. The interest is brought to tax year after year. The assessee may not have fund. He may not have other source of income too and ultimately it would result arrear of demand on one side and unrealisable sticky loans with interest on the other side. The second case would be that the assessee had income from sticky loans as well as income from other sources. If the interest on sticky loans is brought to tax, the assessee will have to pay tax only out of the other income if the same is more than the tax, if not by realising those assets which are yielding income to the assessee. The third case would be where definitely the other income of the assessee is more than the interest on the sticky loans but by gradual process of paying tax out of income-yie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the mode of computing the taxable income and the point of time at which the tax liability is attracted. It cannot determine or affect the range of taxable income or the ambit of taxation. Where no income has resulted it cannot be said that income has accrued merely on the ground that the assessee had been following the mercantile system of accounting. Even if the assessee makes a debit entry to that effect, still no income can be said to have accrued to the assessee. If no income has materialised, there can be no liability to tax on a hypothetical income. It is not the hypothetical accrual of income based on the mercantile system of accounting followed by the assessee that has to be taken into account, but what should be considered is whether the income has really materialised or resulted to the assessee. The question whether real income has materialised to the assessee has to be considered with reference to commercial and business realities of the situation in which the assessee has been placed and not with reference to his system of accounting. The conclusion is supported by the decision in the case of CIT v. Ferozepur Finance (P.) Ltd. [1980] 124 ITR 619 (Punj. Har.): Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt was expressed by the standing counsel that once the decision of the Supreme Court is available, the circular did not have its binding effect. Shri A. Sengupta stated that the method of accounting had been explained by the Supreme Court. The assessee was following mercantile method of accounting and accordingly income accrued during these years. Therefore, the circular may not help the assessee. This argument of the standing counsel may not be accepted. The Supreme Court has not expressed its opinion on its taxability. It has only explained the method of accounting. The circular, on the other hand, speaks about the taxability of the item. Therefore, after the special leave petition was rejected in Geeva Films' case (supra), the circular, which was in existence in the previous years, had binding effect. The other doubt expressed by Shri A. Sengupta was that the circular could only be applicable if there is a finding by the ITO that recovery was practically improbable. The interest on sticky loans is in dispute. The interest on sticky loans had not been brought to tax in earlier years following the circular of 1952. The assessee did not credit its profit and loss account by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 (SC), CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 (SC), CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) and Mahendrakumar Ishwarlal Co. v. Union of India [1973] 91 ITR 101, 115 (Mad.). Therefore, it is held that interest in suspense account could not be taxed during these years. 19. The common objection taken by the assessee as well as the department is the deduction under Section 80M for the assessment years 1972-73 and 1975-76. The IAC while computing income from other sources in the assessment year 1972-73, allowed deduction under Section 57(iii) of the Act. It was stated by him that the assessee had invested a sum of Rs. 2,16,85,400 in shares which yielded dividend. The investment had come out of borrowed money. Therefore, interest payable on this money was expenditure laid out for earning income under Section 57(iii). He calculated the interest at 4.5 per cent and, therefore, deducted from the gross dividend a sum of Rs. 9,75,843. On the same ground interest at the rate of 6 per cent was deducted at Rs. 48,63,180 in the assessment year 1975-76. The assessee came in appeal before the Commissioner (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading Co. (P.) Ltd. v. CIT [1971] 80 ITR 21 (SC). These cases were no doubt distinguished by the standing counsel. However, all the cases cited by the assessee are in its favour wherein it has been indicated that the interest cannot be deducted from the income from dividend. The other point on which the assessee is in appeal is that the Commissioner (Appeals) was not justified in deducting 10 paise per 100 rupees as collection charges. The assessee was a banker and, therefore, it was a dealer in money. The money held by the assessee was its stock in-trade. The assessee was assessable as earning income from business. This view is supported by the decisions in Bihar State Co-operative Bank Ltd. (supra), U.P. Co-operative Bank Ltd. v. CIT [1966] 61 ITR 563 (All.), Berhampur Co-operative Central Bank Ltd. v. Addl. CIT [1974] 93 ITR 168 (Ori.), Addl. CIT v. Ahmedabad District Co-operative Bank Ltd. [1975] 101 ITR 733 (Guj.) and Madras Co-operative Central Land Mortgage Bank Ltd. v. CIT [1968] 67 ITR 89 (SC). The bank has earned dividend in course of its normal business. Money is stock-in-trade of the assessee and the surplus money was invested in shares. Under these circumstances, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 194 of the Act was made. Accordingly, a certificate to this effect was issued which was appearing at page 48 of the paper book. No tax was deductible from the unit-holders. Therefore, Section 32(3)(a) was not applicable to the unit-holders but it was only applicable to the contributories to whom the dividend was paid by the Unit Trust. The assessee, therefore, supported the order of the Commissioner (Appeals) on this issue. 26. Section 2(22) defines 'dividend' which includes any distribution by a company of accumulated profits, whether capitalised or not by the company to its shareholders. The Unit Trust was a corporation according to Sub-section (3) of the Unit Trust of India Act. Section 25A of the Unit Trust of India Act speaks about the distribution of income. Section 32 speaks about the income-tax and other taxes and Section 32(3) indicates that subject to the previous sub-sections, any distribution of income received by a unit-holder from the trust shall be deemed to be his income by way of dividends and the trust shall be deemed to be a company. Therefore, according to the Unit Trust of India Act, the Unit Trust was a corporation and at the same time under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters which are relevant in respect of the income which had not been brought to tax during the course of the original assessment. He rejected the claim of the assessee for the assessment year 1972-73. The assessee claimed development rebate of Rs. 14,79,210 on the following items: Rs. (i) Additions on Safe Deposit Vault including Strong 5,69,700 Room (ii) Additions on Safe Deposit Lockers 11,48,000 (iii) Additions on Safe 7,34,000 (iv) Additions on Typewriters and Calculators 3,47,140 (v) Additions on Furniture Fixtures such as cup- boards, counters and storewels 70,12,560 98,61,400 The IAC found that the assessee only created necessary reserve in the year 1979. The assessee relied on Board's Circular F. No. 228/8/72 IT(A-II), dated 31-12-1975. The IAC examined the circular, however, he was not satisfied that the assessee hand genuine difficulty and, therefore, he disallowed the claim. 28. The assessee went in appeal before the Commissioner (Appeals) and the Commissioner (Appeals) following the decision in CIT v. Union Bank of India Ltd. [1976] 102 ITR 270 (Bom.) allowed development rebate on additions of safe deposit lockers and safe. He also allowed development rebate on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebate on typewriters and calculators. He referred to Section 33(6) of the Act and urged that typewriters and calculators were used by the assessee in its office. Therefore, these were the office appliances on which specifically the development rebate is not available under Section 33(6). He placed reliance on the order of the IAC and further stated that the assessee could not state as to why it could not create reserve when the decision in Union Bank of India Ltd.'s case (supra) was available which was delivered on 25-6-1975. The assessee could not explain its difficulty, and, therefore, the Commissioner (Appeals) was not justified in allowing development rebate on typewriters and calculators. 30. The development rebate was claimed by the assessee in course of the reassessment proceedings. The claim of the assessee was turned down by the IAC as well as the Commissioner (Appeals) on the ground that the claim for development rebate was not made in course of the original assessment proceedings. We have concluded the matter earlier while the question of validity of the assessment had been taken up. It had been said that once the assessment is reopened, the original assessment becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would show that what is plant and machinery on which development rebate is available for one assessee need not be plant and machinery for another assessee. For example, certain types of fixtures may constitute plant and machinery used in an assessee's business if the assessee's business is a hotel, but such fixtures and fittings would not amount to plant and machinery of another assessee whose business may be totally different, e.g., an ordinary commercial office. In the latter case, it may merely be a part of the building or setting in which the business is carried on and not the apparatus with which the business is carried on ... Therefore, storewels could be termed as 'plant' of the assessee. It is an important article for a bank. It attracts customers and, therefore, the assessee is entitled for development rebate on the addition of storewels. Cupboards and counters could not be termed as 'plant' even looking to the business of the assessee. Cupboards and counters are furniture and fixtures which are ordinarily used in each and every business and, therefore, it could not be termed as apparatus necessary for the business of the assessee. 33. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals) is set aside on this issue and referred back to the IAC for the determination of the correct figures of typewriters and calculators in view of the above direction and, accordingly, allow development rebate to the assessee. 35. [This para is not reproduced here as it involves a minor issue.] 36. The assessee came in appeal. The assessee claimed that the system was changed during the year on the basis of the note given by the auditors. The note given by the auditors was furnished to the Commissioner (Appeals) in the following words: Guarantee commission is accounted for at the time of issue of guarantee notwithstanding that the guarantees may be for the periods covering more than one year. We feel that the guarantee commission on such guarantees should be spread over the duration of the guarantees so that the profits are accounted for largely when accrued as amounts involved in such cases are sizeable. On the basis of this note, the Commissioner (Appeals) did not accept the explanation of the assessee. However, he found that the figure estimated by the IAC was not correct and he determined the figure at Rs. 91,66,288 and, accordingly, the addition was modified. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents for several years and, therefore, only the proportionate guarantee commission accrued during the year under appeal. Shri P.T. Sanyal, under the above circumstances, urged that the total guarantee commission included by the Commissioner (Appeals) was not proper and the additional amount taken by him may be deleted. He relied on Gappumal Kanhiyalal v. CIT [1961] 42 ITR 446 (All.). The standing counsel, on the other hand, specifically referred to the orders of the IAC and the Commissioner (Appeals) on this issue and urged that the guarantee commission was realised during the year under appeal. The assessee was following mercantile system of accounting and the assessee could not prove that though the amount was realised but the entire amount did not accrue during the year under appeal. Hence, the Commissioner (Appeals) was justified in including the total commission during the assessment year 1975-76. He relied on CIT v. K.R M.T.T. Thiagaraja Chetty Co. [1953] 24 ITR 525 (SC) and Morn Industries Ltd.'s case (supra). 38. [This para is not reproduced here as it involves a minor issue.] 39. Now, the common objection of the department is that the Commissioner (Appeals) should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount is positively included as income or a corresponding amount of loss claimed is disallowed in the assessment, the net effect is the same. In both cases, the particular amount is being subjected to the Income-tax Act. This is forbidden by Section 36(4) of the State Bank of India Act. This finding was applied by the Commissioner (Appeals) for the assessment year 1972-73. 40. A preliminary objection was taken by the assessee's counsel, Shri P.T. Sanyal, that the Commissioner (Appeals) is not under any obligation to enhance the assessment. Therefore, the IAC was not competent to raise this issue in course of the appeal before the Commissioner (Appeals). It was further stated that if the matter is decided against the assessee, the action would lead to the enhancement of the assessment which is not permissible. Shri A. Sengupta objected to the preliminary objection taken by the assessee's counsel. He stated that appeal had been filed under Section 253 of the Act against the order of the Commissioner (Appeals). The department can file appeal on any of the points on which it was aggrieved by the order of the Commissioner (Appeals). Therefore, the preliminary objection taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bank of India Act. He stated that the assessee has not indicated as to what was the sum which had been agreed upon between the Reserve Bank of India and the State Bank of India. Because the assessee was only entitled over that sum which was attributable to the branches established under Section 16(5). He further stated that the amount which was applied from the fund was towards losses and according to Section 16(4), it was not to be treated as income of the assessee. Shri A. Sengupta urged that whatever the amount was applied from the fund was not to be taxed. But the concept of real income and real expenditure will have to be kept in mind while making the assessment, The assessee incurred certain expenditure on the opening of the branches. A portion of it was met by the fund under Section 36(1). Therefore, the correct expenditure and/or loss of the assessee was the actual loss minus the fund received by the assessee. For this proposition, he relied on Indian Molasses Co. (P.) Ltd. v. CIT [1959] 37 ITR 66 (SC) and urged that the request of the IAC was fair and the same should have been accepted by the Commissioner (Appeals). 43. Shri P.T. Sanyal very strongly supported the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (5) of Section 16; ** ** ** (4) No amount applied for any of the purposes specified in Sub-section (2) shall, for the purposes of the Indian Income-tax Act, 1922, be treated as income, profits or gains of the State Bank. The State Bank, under Section 16(5), was to open 400 new branches in addition to branches which it was to open under Section 16(3). The State Bank of India was maintaining special fund known as Integration and Development Fund. The fund was the properly of the Reserve Bank of India and it was provided that no shareholder of the State Bank of India or any other person shall have any claim in the amount held in the fund. The fund was to be applied for certain objects which were enumerated under Section 36(2). Section 36(2)(a) is the relevant clause for the purpose of the dispute. Under this clause, there was a provision that an amount will be given out of the fund to meet the loss which the State Bank will incur on the branches established under Section 16(5). The assessee, in the assessment years 1972-73 and 1975-76 had received Rs. 2,74,22,100 and Rs. 1,30,11,737 respectively from the fund towards losses. The amount received in the assessment year 1972- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced here as it involves a minor issue.] 46. Shri A. Sengupta referred to the balance sheet of the company and stated that the shares and securities held by the assessee were not stock-in-trade but these were the assessee's investments. Shri A. Sengupta, in this connection, referred to the assessee's balance sheet and urged that the assessee has treated them as its investments in the balance sheet. He, therefore, urged that the loss claimed by the assessee was not allowable. He further stated that the Commissioner (Appeals) has not correctly allowed the loss following the decision in Indo Commercial Bank Ltd.'s case (supra). Shri A. Sengupta further stated that the loss, even according to the assessee, on revaluation incurred in the earlier years was never claimed. Each year is a self-contained year and the assessment is made after considering the income and the expenditure for the year. The loss incurred by the assessee in the earlier years could not be allowed if the same was not incurred in the year of assessment. He said, in this connection, that the principle of assessment is that what had been done can be considered but what could be done cannot be taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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