TMI Blog1991 (8) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 19,199 as trading loss arising from the investment in U.P. State Development Loan for the assessment year 1965-66? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the sum of ₹ 36,745payable by the assessee-company as interest under section 3(3) of the U.P. Sugarcane (Purchase) Tax Act, 1961 was not an allowable deduction under section 37(1) and/or section 28 of the Income-tax Act, 1961? 4. Whether, on the facts and in the circumstances of the case, the sum of ₹ 3,572 paid as interest under section 220(2) of the Income-tax Act, 1961 was an allowable deduction under section37(1) and/or section 28 of the Income-tax Act, 1961 ? 5. Whether, on the facts and in the circumstances of the case and having regard to the second proviso to rule 5 of the Income-tax Rules, 1962, the Tribunal was right in holding that the extra shift depreciation allowance for double and triple shift working in case of the assessee's factory was not to be calculated at 100 per cent of the normal depreciation allowance for the relevant previous year even though it worked triple shift during all the working s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clerk ascertained from the peon if the cart had been properly placed and if he replied in the affirmative, the clerk entered the name of the farmer, the name of the cart driver, the serial number of the society's parchi in the receipt (called the parchi) of which five copies were prepared. After the cart had been weighed, its weight was entered in the said parchi. The copies were delivered to the farmer of the driver of the cart, one was handed over to the society's clerk and the 4th was sent to the mills. The empty cart used to be weighed and its weight was also entered in the said parchi. The rate and price of the sugarcane were also entered therein. After the above formalities were carried out, the cane used to be loaded by the loading and unloading contractors of the mills and sent to the factory premises. The said parchis used to be made the basis of the liability of the company for payment of the sugarcane price and the price mentioned therein was the one which could be recovered from the society by the fanner or his authorised agent. The society in turn could recover the amount from the mills on the basis of the said parchis. In the first week of March 1964 the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponding credit to the 'Cane price under dispute' account. Thus, the first appellate authority had concluded that the said loss accrued to the assessee before the end of the accounting period in question. On further appeal, the Tribunal has reversed the said view in view of the fact that the assessee disputed the said claim of the sugarcane society in toto and the provision of ₹ 71,395 made on 30-9-1964 was not an ascertained liability in the year in dispute. Thus, on the facts of the case, the Tribunal concluded that the sum of ₹ 71,395 was not an accrued or ascertained liability during the year in dispute. The question, therefore, that arises is, at what point of time the liability in question to pay by the assessee arose, whether on 30-3-1964 as claimed by the assessee or later on 30-9-1964 when the claim was finally settled and that too at lesser amount. In arriving at this conclusion it took into consideration one more vital fact that the assessee was all along disputing the entire amount during the year in dispute and no liability had crystallised during the year in dispute. 6. Shri Bharat Ji Agarwal, learned counsel appearing for the assessee, had in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1964. much after the date of close of the accounting period of the assessment year in dispute. This decision, therefore, in our opinion fully covers the controversy involved before us. In view of the same, applying the ratio of the case of Oriental Motor Car Co. ( P.) Ltd. (supra) we hold that the liability of the assessee in the present case was crystallised only when the dispute was finally settled on 30-9-1964, i.e., much after the date of close of the accounting period of the assessment year in dispute of the assessee. Therefore, the deduction of ₹ 71,395 could not be allowed in the assessment year in dispute and the Tribunal was right in law in taking the same view. 8. The question No. 1, therefore, is answered in the affirmative and against the assessee by holding that the Tribunal was right in law in holding that the assessee is not entitled to the deduction of ₹ 71,395as trading loss in the assessment year in dispute. 9. Coming to question No. 2 regarding the claim of deduction of ₹ 19,199 as trading loss arising from the investment in U.P. State Development Loan for the assessment year in dispute, we find that the facts relevant to the same are tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It had subscribed to certain Government loans and ultimately suffered a loss. It was held that the loss was to be allowed as a matter of business expediency. In view of the aforesaid decision of the Division Bench in the case of S.B. Sugar Mills ( supra), which in turn is based on a decision of the Supreme Court in the case of Patnaik Co. Ltd. ( supra), question No. 2 is answered in the negative and in favour of the assessee holding that the assessee was entitled to a deduction of ₹ 19,199 as trading loss arising from the investment in the U.P. Government securities. 10. Regarding question No. 3 which relates to a sum of ₹ 36,745 payable by the assessee-company as interest under section 3(3) of the U.P. Sugarcane (Purchase) Tax Act, 1961, the learned counsel for the parties concede that in view of the decision of the Supreme Court in the case of Mahalakshmi Sugar Mills Co. v. CIT [1980] 123 ITR 429 which in turn has been followed by a Bench of five Judges of this Court in the case of Triveni Engg. Works Ltd. v. CIT [1983] 144 ITR 7342 (FB), the said question has got to be answered in the negative and in favour of the assessee by holding that the assessee was ent ..... 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