TMI Blog1999 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... iability in the computation of the assessee's business income in the year 1983-84 ?" The facts, as found by the Appellate Tribunal, are that the assesse claimed before the Assessing Officer a deduction of a sum of Rs. 4,42,330 being additional ground rent payable to the Divisional Forest Officer, Chalakudy. The assessee is engaged in the business of manufacture of plywood. The assessee was allotted various coupes and it could fell trees, cut and remove timber required for the manufacture of plywood. Under the terms of the agreement, the assessee had to cut and remove the timber by a specified date. The assessee failed to remove the timber within the stipulated period on account of some labour trouble. The assessee, then, applied for exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s arrear of land revenue. The demand for the additional sum of Rs. 4,42,330 was made under a Government order. Even though initially the rights of the parties, namely, the Government and the assessee, originated from a contract, the Government's right to demand the payment and enforce the same took a statutory colour later. The rules framed by the Government have the force of law. Therefore, it cannot be said that what is involved in this case is a mere contractual liability." The Tribunal further observed as under : "Where the assessee follows the mercantile system of accounting, it would be open to the assessee to claim a liability in the year in which it accrued or if the same is disputed, in the year in which the dispute is settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled. The assessee is seriously disputing the liability, inasmuch as a civil suit is filed which is going on between the parties. We are, therefore, of the considered view that the seriously disputed accrued liability could be claimed in the year when the dispute is settled. The position would have been different if it were a statutory liability. The statutory liability can be claimed in the year of accrual, notwithstanding the fact that the same is disputed. The Tribunal reiterated as below : "Where a liability has accrued, the same will have to be allowed even though some dispute might have been raised by an assessee." In support of the above view, the Tribunal relied on the decision of the Bombay High Court in Addl. CIT v. Buckau W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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