TMI Blog1995 (1) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment by the land and building tax authority pertaining to the earlier years is not allowable as a deduction in computing the income for the assessment year 1979-80 as the assessee followed the mercantile system of accounting ? " The facts relevant for the purpose of disposal of the above question are that the assessments of the assessee under the Rajasthan Land and Building Tax Act for the assessment years 1973-74 to 1977-78 were completed on February 28, 1978. During the assessment proceedings for the year ending on June 30, 1978, i.e., 1979-80, deduction of Rs. 5,05,758 was claimed which included the liability of house tax paid under the Rajasthan Municipalities Act for a sum of Rs. 34,023. The balance amount was in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) has wrongly been interpreted and since the admitted amount of tax as per the assessee has already been paid, the additional liability created could not have been anticipated. We have considered over the matter. This court had an occasion to examine the above dispute in the case of CIT v. Shah Engineering Pvt. Ltd. [1994] 208 ITR 985, in which the following observations were made : " In the present case, the matter pertains to the land and building tax liability for financial years 1973-74 to 1977-78. The assessee had paid a sum of Rs. 190 in respect of each of the financial years 1973-74 to 1976-77 and no amount was paid for 1977-78. The assessment was made by the Assistant Director, Land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification and it could not be said that the additional liability which has been created by virtue of the assessment order was ascertained even before the finalisation of the assessment. We are, therefore, of the view that the additional liability which has been created in the present case in the assessment order was not an ascertained one before the date of assessment and, therefore, the Income-tax Appellate Tribunal was justified in holding that the liability of Rs. 11,900 pertaining to the earlier years and demanded by the assessing authority under the Rajasthan Land and Building Tax Act, on May 23, 1978, being a statutory liability is allowable for computing the total income of the assessee in the year under consideration." Following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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