TMI Blog1985 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ,314 and Rs. 1,594 in the assessment years 1968-69, 1969-70 and 1970-71, respectively, were not allowable as deductions in computing the income of the assessee ? " From the facts as found from the statement of the case as well as the order of the Tribunal, it is evident that the assessee, as individual, is working as a contractor for supplying vegetables, fruits, dressed meat and meat on hoof, etc., to the army authorities in Assam. Certain recoveries were effected by the military authorities from the assessee for either delay in supplying materials or supplying materials of sub-standard quality. These recoveries were effected under the agreement. The recoveries effected for the assessment years 1968-69, 1969-70 and 1970-71 were Rs. 13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was further urged that in case there was a delay in the supply of the materials, the army authorities would purchase the same from the market and the difference between the contracted rate and the market rate would be recovered from the contractor. It was also submitted that the army authorities would have also recovered the difference between the market rate and the contracted rate in case sub-standard qualities of materials were supplied. It was further pointed out by the Department that there is no material before the Tribunal from which the Tribunal may conclude as to how much recoveries were effected for the delay in supplying the materials and how much recoveries were effected for supplying the sub-standard quality of materials. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty recovers the damage, such damage could not been allowed as deduction. However, he has not been able to cite any authority to support his contention. I also find that the Tribunal has wrongly placed the onus on the assessee to prove that the delay effected in supplying the materials was for no fault of the assessee or to prove that the assessee supplied materials of standard quality which was erroneously held to be of sub-standard quality by the military authorities. Under the circumstances, the only fact which remains on record is that the military authorities made deductions from the bills of the assessee on account of delay in the supply of the materials or on account of supplying sub-standard quality of materials. Mr. Pawan Kumar ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages paid by the assessee to the military authorities in the three assessment years as mentioned above are allowable as business expenditure under section 37(1) of the Act. In view of my discussions above, I hold that the Tribunal has not taken a correct view of law in disallowing the claim of the assessee relating to the recoveries from the bills in the three assessment years in question. I accordingly hold that the Tribunal was not correct in holding that the sums of Rs. 13,375, Rs. 12,314 and Rs. 1,594 in the assessment years 1968-69, 1969-70 and 1970-71, respectively, were not allowable as deductions in computing the income of the assessee. The common question referred for the three assessment years in question is accordingly answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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