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2008 (2) TMI 383 - HC - Income TaxAssessee engaged in kury business and financing. The wage settlement with the employees expired on 31.7.1992, i.e. towards the middle of the previous year relevant for the assessment year 1993-94. Negotiations for settlement were going on in the previous year and the actual agreement approving wage increase with effect from 1.8.1992 was signed on 9.6.1993. This was approved by the Government by order dated 20.10.1993. The assessee claimed increased wages payable to the employees during the previous year as a deduction in the return filed for the assessment year 1993-94. The assessing officer disallowed the claim on the ground that liability arose under the agreement approved by the Government in the succeeding year. - Held that deduction allowed as claimed by the assessee on the ground that by the time the accounts were finalised and returns were filed, the assessee had ascertained the actual liability attributable to the previous year and therefore the actual amount payable only was claimed based on mercantile system of accounting followed by the assessee.
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