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2009 (2) TMI 399 - HC - Income TaxBusiness Expenditure- the assessee has claimed deduction of finance commission which was charged as expenditure in the profit and loss account of the assessee. The aforesaid deduction was claimed in the same year in which the hire purchase agreement was entered into by the assessee irrespective of the fact that actual payment was made even in the following years. The assessee had purchased trucks, trolleys, etc., under an agreement with the finance companies and, as per the agreement for hire purchase, the assessee was to make payment of the hire purchase amount and finance commission in instalments. As per the accounting system adopted by the assessee, the entire amount payable towards finance commission as per the hire purchase agreement was claimed in the assessment year in which such hire purchase agreement was entered into irrespective of the fact that the actual payment was even made in the following years. The issue raised by the Revenue is as to whether the entire amount towards finance commission can be deducted or can be claimed in the assessment year in which hire purchase agreement was entered into or the part of finance commission has to be shown for subsequent years in which actual payment was made. Held that- the department having permitted the assessee to claim the benefit of finance commission in the year in which hire purchase agreement was entered into, the same system was required to be continued for the assessment year 1981-82, and this agreement was allowed looking to the peculiar facts and circumstances of the case and the fact that the amount so claimed was not much higher. The assessee was entitled to deduction of the finance commission.
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