TMI Blog1997 (3) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ict of Ludhiana. The petitioner made a provision for Rs. 20,000 in the books of account for the assessment year 1976-77 on account of purchase tax which was payable under the Punjab General Sales Tax Act, 1948. Though the question of levy of purchase tax was still under challenge, the provision as aforesaid was made in the books of account so as to meet the liability as and when it was finalised. The assessee's plea was that purchase tax liability relating to the assessment year 1974-75 was still to be quantified but, since the liability on account of purchase tax did accrue on the event of purchase, the assessee was entitled to claim deduction on account of the tax liability on accrual basis. The Assessing Officer, however, did not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to pay tax had accrued in the year 1974-75 and was payable to the Government in the next year, it was for that reason that deduction has been claimed during the income-tax proceedings initially at Rs. 20,000 before the Income-tax Officer but subsequently at Rs. 40,514 before the Appellate Assistant Commissioner. Deduction on account of tax liability can be claimed on accrual basis, because liability to pay tax arises no sooner than the event of sale or purchase, as the case may be, takes place. The Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, has laid down that the moment a dealer made either purchases or sales, which was subject to sales tax, the obligation to pay the tax arose. Although that liability co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability having been determined at Rs. 40,514 by the sales tax authority. The Appellate Assistant Commissioner allowed deduction at Rs. 20,000 but declined to grant deduction at the enhanced amount. The revision petition filed by the assessee was rejected by the Commissioner of Income-tax for the same reasons which have been discussed by the Appellate Assistant Commissioner. So far as the maintainability of a revision petition under section 264 of the Income-tax Act is concerned, there is no discussion about the same by the Commissioner of Income-tax but it appears that the petitioner was not well advised to file a revision petition after the order of the income-tax Officer had merged with the order of the Appellate Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
