TMI Blog1962 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, it had to provide transport for transporting sugar from the docks to the sugar godowns. For the purpose of this work which the assessee had undertaken to do, according to the assessee, the Government was to send it a programme of lifting up sugar from the docks, giving the quantity of weight to be lifted and the number of trucks required. After carrying out the work for some time, the assessee found that the Government were unable to provide the requisite load for the assessee's trucks. The assessee brought this fact to the notice of the Government and asked the Government to take suitable action in that connection, but no action was taken by the Government. The assessee thereupon intimated to the Government that it would not be pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment due to the assessee in respect of the bills for the work done by it. According to the Tribunal, the income of ₹ 1,45,395 had accrued to the assessee according to the mercantile system of accountancy which had been adopted by the assessee and the said income was liable to tax in the year of account. In the assessment of the assessee for the account year, there was also a dispute with regard to an amount of ₹ 89,440 which the assessee claimed as loss suffered by it in a partnership business which the assessee had carried on with one Phalton Singh at Rourkela. This claim was not allowed by the income-tax authorities on the ground that the same was not proved. The assessment proceedings against the firm were still prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hta, learned counsel for the assessee, has argued that on the facts and circumstances of the case, the sum of ₹ 1,45,395 cannot be said to said to have accrued or arisen to the assessee during the relevant previous year. He has argued that although the bills were submitted by the assessee in respect of the work done by it, the said bills have not yet been finally passed by the authorities and the income as claimed in the bills cannot therefore be said to have accrued to the assessee. He has in that connection invited our attention to a letter written by the Assistant Director (Food) to the Regional Director (Food) of Calcutta on 7th December, 1955, which is annexure A to the statement of the case. In that letter, the Assistant Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, and that they would be entitled to deduct the amount of damages from the payment due from them to the assessee in respect of the work done. It cannot, therefore, be said that the bills submitted by the assessee to Government in respect of the work done had not been accepted by Government or that Government had not accepted their liability to make the payment to the assessee in respect thereof. The system of accounts maintained by the assessee being mercantile system, accrual of the income had no reference to the point of time when the payments were actually received by the assessee, but the accrual was when the bills were accepted and the liability in respect of the payment was accepted by Government. It appears, therefore, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim damages, no enforceable claim can be said to have arisen in favour of Government, and no enforceable liability can be said to have been incurred by the assessee in respect thereof. It is undisputed that there has been no such adjudication of the claim of the Government for damages. It cannot, therefore, be said that the amount due from Government to the assessee in respect of the work done has not accrued because of an enforceable claim against the said amount in favour of Government. In support of his submission that the claim set up by Government against the amount due to the assessee from Government is an enforceable claim, Mr. Mehta has invited our attention to certain clauses of the agreement between the assessee and Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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