TMI Blog1989 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... are as under : The assessee-company carries on the business in the manufacture and sale of tea and plywood. It owns two tea gardens which are situated in the State of West Bengal. The assessee-company follows the mercantile system of accounting. The previous year of the assessee relevant to the assessment year 1973-74 which is now in reference before this court is the calendar year 1972. In the course of the assessment proceedings for the said year, the assessee-company claimed deduction in respect of rent and cess for the earlier year aggregating in all to Rs. 41,046 payable to the Government of West Bengal for its Mahalderam and Jungpara Tea Gardens in terms of the settlement arrived at between the Indian Tea Association and the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1953, by the Amendment Act of 1969. Sub- section (4) made it clear that, notwithstanding anything to the contrary in any judgment, decree or order of any court or Tribunal or in any other law, the rent determined under sub-section (2) or sub-section (3) shall take effect and shall be deemed always to have taken effect from the date of vesting. The tea industry, however, continued to dispute the right of the Revenue Officers to redetermine the lease rent at an enhanced figure with retrospective effect. Various types of disputes were raised by the tea garden owners and no payments were made at the enhanced rate to the State Government. Faced with this situation, the Government initiated a dialogue with the tea industry through the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government will not charge any interest on arrears of rent up to April 1, 1971, provided the annual payment is made regularly as at (b) above. The Government have accepted the formula and intend to implement it without any further delay. On execution of the agreement with individual tea estates on the lines of the aforesaid decisions, fresh leases in Form I (appended to Schedule F of the Estate Acquisition Rules) will be issued. The State Government also drew up a form of agreement to be executed by each of the tea garden owners. This decision of the State Government along with the format of the agreement was circulated by the Indian Tea Association to its member gardens by letter dated February 25, 1972. In this letter, the Indian T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee-company, the Deputy Commissioner, Darjeeling, intimated the assessee-company the actual rent and cess as determined to be payable by it and the assessee-company was also requested to pay the same and execute necessary agreement in the prescribed format, copy whereof was also enclosed. The Income-tax Officer did not allow deduction in respect of the aforesaid amount on the ground that the provision for expenses related to the earlier years. The Appellate Assistant Commissioner, however, allowed the assessee's appeal and held that since the liability arose and was ascertained during the year under appeal, the deduction was rightly allowable in this year. On further appeal by the Revenue, the Incometax Appellate Tribunal, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But, from the letter dated May 10, 1972, received by the assessee-company from the office of the Deputy Commissioner, Government of West Bengal, Darjeeling Touzi Department, it appears that the quantum of additional rent and cess payable by the assessee-company was determined and quantified and the assessee-company was asked to execute the agreement. The assessee-company accepted such liability, executed the agreement with the Government of West Bengal and made provision in its books of account in respect of this additional liability in the year under reference. It was on this basis that the liability to pay rent and cess at the enhanced rate from the date of vesting was fastened on the assessee-company during the relevant previous year an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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