9911796707
TMI Blog1973 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... for military lorry bodies at a fixed rate. According to the terms of this contract, the Government had to supply steel melting scrap and borings and turnings required for the purpose of the contract at the rate of Rs. 40 and Rs. 10 per ton respectively. After the passing of the Scrap Control Order, 1943, the Government demanded from the assessee-company payment of the freight charges also in respect of the melting scrap and borings and turnings supplied by the Government to the assessee-company. The assessee-company, however, disputed its liability to pay the freight charges. Since the Government did not accept the assessee-company's claim, the latter had to pay the freight charges also in respect of the goods supplied to it by the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 21,107 from the assessee-company's income. Against this order of the Appellate Assistant Commissioner, the department went in appeal before the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal "). The Tribunal reversed the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer. The grounds on which the Tribunal sustained the addition of Rs. 21,107 to the income of the assessee-company will be referred to at a later stage. The assessee-company filed an application under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as " the Act "), requiring the Tribunal to refer the question of law said to arise out of the order of the Tribunal but the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2A) of section 10 of the Act, the relevant portion of which reads as follows: "Where for the purpose of computing profits or gains under this section, an allowance or deduction has been made in the assessment for any year in respect of any......expenditure......incurred by the assessee and, subsequently during any previous year, the assessee has received, whether in cash or in any other manner whatsoever, any amount in respect of such......expenditure......the amount received by him......shall be deemed to be profits and gains of business, profession or vocation and to have accrued or arisen during that previous year. " As rightly observed by the Tribunal: "The pre-requisite for the application of this provision is that the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from the profits. The revenue has admittedly not produced any evidence to prove positively that this amount had been allowed as expenditure in any of the earlier assessment years. The assessment records of the earlier assessment years have not been produced by the department for this purpose as, according to the department, these records have been lost. The department, however, seeks to discharge the onus that lay upon it by relying upon certain circumstances, namely, that the assessee-company having paid the extra price as demanded by the Government did not resort to any legal proceedings to claim the refund and allowed even the period of limitation to expiry without initiating any legal proceedings. These circumstances, in our view, do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim was actually allowed by the department. In any case, when the circumstances are capable of being construed either in favour of the department or in favour of the assessee, the rule is that they should be construed in favour of the assessee. The conclusion of the Tribunal that the amount in question had been allowed or deducted in any earlier assessment year is not based upon any evidence at all and is based on merely surmise and conjecture. We, therefore, hold that the amount of Rs. 21,107 is not includible in the assessee-company's income of this year under section 10(2A) of the Act. The question referred to us is answered in the negative, i.e., in favour of the assessee and against the department. The assessee-company is also entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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