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TMI Blog2005 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is right in law and on facts in directing the Assessing Officer to allow the provision of interest made by the assessee as deduction?" (ii) For the assessment years 1979-80 to 1983-84: "Whether the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer to allow deduction towards guesthouse expenses?" The assessment years are 1978-79, 1979-80, 1980-81, 1981-82, 1982-83 and 1983-84. The respective accounting periods are the years ended on June 30, 1977 to June 30, 1982. The facts relatable to the question raised at the instance of the assessee for the assessment years 1981-82 and 1982-83 may be briefly stated. The Central Government fixed price of levy sugar at Rs. 124.59 per quintal for the crushing season 1971-72. The assessee challenged the aforesaid fixation of price and obtained an interim order from this High Court, where-under the assessee along with other sugar factories was permitted to sell levy sugar at Rs. 150 per quintal. Therefore, the assessee sold levy sugar at a price higher than the controlled price. On March 12, 1973, the petition came to be withdrawn by the assessee and was accordingly dismissed by the High Court. It ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess realisation or excess realisations." This order was made on May 2, 1980. On the strength of this order the assessee made a claim for the assessment year 1981-82 and 1982-83 claiming a deduction of Rs. 21,67,041. According to the assessee the amount was allowable either in the assessment year 1981-82 or the assessment year 1982-83. The Assessing Officer rejected the claim and the assessee moved the Commissioner (Appeals) by way of additional grounds. The claim was rejected by the Commissioner (Appeals). The assessee carried the matter in appeal before the Tribunal. The Tribunal came to the conclusion that in the light of the directions made by this court the claim that the liability accrued in the assessment year 1981-82 or the assessment year 1982-83 was liable to be rejected. According to the Tribunal the excess realization having been made much prior to the decision of the High Court and the fact that the assessee was statutorily liable to pay interest on such excess realization from the date of the amount realized indicated that the liability to make payment of the excess amounts so realized by the assessee arose even before the High Court delivered the judgment. The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, under no circumstances, was relatable to the assessment years in question. That the liability was in fact relatable to the point of time when the excess realization had been made by the assessee. That by virtue of the provisions of and the orders made under the Essential Commodities Act the assessee was entitled to recover only the specified price and any excess recovered was liable to be returned, the recovery being illegal. He submitted that even otherwise on the day when the assessee withdrew the writ petitions the interim order ceased to operate and the assessee became liable to make payment on that day, viz., March 12, 1973. Therefore, in any view of the matter, the liability was relatable neither to the assessment year 1981-82 nor 1982-83. The position in law is well settled. A statutory liability arises as soon as the specified event occurs or the condition stipulated by the statute gets fulfilled (Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971] 82 ITR 363 (SQ). As against that in the case of a contractual liability, the liability arises or accrues only when the dispute is finally adjudicated upon or is settled amicably (CIT v. Swadeshi Cotton and Flour Mills P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntenable and held that: "It is not disputed that on the dismissal of the writ petitions the interim orders passed therein automatically stood discharged.... In the present case when the High Court dismissed the writ petition the interim order passed therein became non-existent and inoperative." Hence, on March 12, 1973, the right which the assessee was exercising to collect amount more than the controlled price came to an end, and accordingly, at least on that day, the liability arose to return the amount, the amount having admittedly been collected over and above the price fixed under the Control Order. Examining the issue from a slightly different angle also would go to show that even if, for the sake of argument, the assessee is permitted to contend that merely on withdrawal of the writ petitions no liability arose, yet there is no accrual of liability in any of the assessment years under consideration. The Equalisation Fund Act having come on the statute in 1976 and the Central Government having constituted equalisation fund under the provisions of the said Act, the assessee became liable by virtue of the provisions of the said Act to return the excess realization, with specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruary 4, 1975, seeking recovery of the said amount along with interest on the ground that the refund was wrongly issued. The assessee challenged the said order but did not succeed before the High Court. Subsequently, after negotiations, on August 29, 1975, an order came to be made by the Deputy Commissioner of Sales tax requiring the assessee to make payment of Rs. 59,08,519, which was admittedly paid in instalments. Thereupon, it appears that there was a dispute amongst the parties in relation to the interest payable on the aforesaid sum. The assessee approached the State Government who, vide order dated May 30,1977, held that the assessee should be charged interest at a reduced rate and accordingly, on June 14, 1977, the Deputy Commissioner of Sales Tax worked out three instalments in which interest was payable to the tune of Rs. 4,31,234, Rs. 4,75,512 and Rs. 5,26,117. It appears that even at this stage the rate at which interest was worked out was disputed and subsequently the same was settled vide letter dated June 24, 1977. The assessee, accordingly, made the provisions of the sums as aforestated, out of which the Assessing Officer had granted partial relief for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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