TMI Blog1958 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment of ₹ 2,45,285 representing commission not received by the appellant was proper and legal; and 2. Whether on the facts and circumstances of the case, the commission of ₹ 85,287 payable on sales effected in the Indian States could be said to have accrued and arisen in British India and was assessable in British India ? The principle laid down by the Supreme Court in K.R.M.T.T. Thiagaraja Chetty v. Commissioner of Income-tax [1953] 24 ITR 535, under virtually similar circumstances, concludes the second question. We answer the second question in the affirmative and against the assessee. The relevant facts with reference to which the first question has to be answered were not in dispute. The Meenakshi Mills ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental authorities applied the proviso to section 13 of the Income-tax Act and included the entire amount of ₹ 2,45,285, in the assessable income of the assessee for the year of assessment 1944-45, though the assessee had not treated that sum as amount received by it in cash during the relevant accounting period. The Assistant Commissioner recorded : There was no dispute or uncertainty about the amount payable and it was, therefore, available to be drawn at any time the appellant chose to do so. The Tribunal upheld that assessment. Apparently the Tribunal accepted the contention of the assessee, that, though the accounts related to the first accounting period of its activities, it was a system of accounting regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o must be necessarily invoked here. In our opinion, the circumstances established in this case iustified the conclusion of the Tribunal, that the system of accounting adopted by the assessee was not one from which the true income of the assessee in the relevant year of account could be properly deduced ; and that justified recourse to the proviso to section 13 of the Act. It is true that the cash basis is a well known system of commercial accounting. It is equally true that the assessee is entitled to adopt its own system of accounting. None the less, if in the circumstances of a given case that system failed to disclose the true income of the assessee in the relevant accounting period, it was open to the Department to ignore the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t periods were dealt with by the assessee and the mills, it was apparent that, while the time lag between the date of credit in the account books of the mills and that in the account books of the assessee with reference to the monthly payments pf the half per cent. commission was comparatively small, there was a pronounced time lag in the assessee bringing to its books amounts or portions thereof which lay to its credit in the account books of the mills and which represented the 5 per cent. commission of profits to be ascertained and paid on annual basis. On March 31,1949, a sum of over rupees seven lakhs, which represented accumulations of previous years, stood to the credit of the assessee in the books of the mills. The assessee credited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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