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TMI Blog1991 (12) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... year is 1974-75. The dispute related to the assessee's claim for deduction of Rs. 18,813 on account of extra salary and wages paid to its employees in the year in question. The claim was disallowed by the Income-tax Officer holding that it related to earlier years. According to the Income-tax Officer, the assessee who was maintaining accounts on mercantile basis should have made provision for this payment in the years to which this amount related and, in the absence of such a provision, it could not legitimately claim deduction of this amount during the year under consideration. In appeal before the Appellate Assistant Commissioner, it was contended that the assessee was required to pay salary and wages at the highest rates fixed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. Following these decisions, the Tribunal dismissed the appeal of the Department. We are clearly of the opinion that the view expressed by the Tribunal is correct. In the case of CIT v. Swadeshi Cotton and Flour Mills Pvt. Ltd. [1964] 53 ITR 134, their Lordships of the Supreme Court were concerned with an identical question. There the assessee had paid a sum of Rs. 1,08,325.93 by way of profit bonus to its employees for the calendar year 1947 in terms of an award made on January 13, 1949, under the Industrial Disputes Act. It debited the amount in its profit and loss account for the year 1948 but in fact paid it to the employees in the calendar year 1949. The Supreme Court ruled on these facts that the liability to pay the bonus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) in support of his contention. We have carefully scrutinised decisions but find that the same are distinguishable on facts. In each case, the liability sought to be deducted by the assessee in later years already stood ascertained and materialised by the force of the relevant statutes themselves and nothing further was required to ascertain the amount. Consequently, it could not legitimately be claimed as deduction in the later years. That is very different from the situation in the present case. Here the liability to pay the extra salaries crystallised and became quantified only after the decision of the Assistant Labour Commissioner. It could not, therefore, be treated to have accrued earlier by the mere issuance of the Wage Board Not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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