TMI Blog1979 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of manufacture of cotton yarn and cloth. It has got several units including one at Kanpur and another at Pondicherry. Its head office is at Kanpur. It follows the calendar year as its year of account. In its assessment for the assessment year 1960-61, the assessee in its head office account claimed a deduction of Rs. 18,533, being the sum aid to Ahmedabad Textile Industry Research Association towards its annual contribution for the year ended March 31, 1958. The bill for that amount was of 18th May, 1957, and it was to the following effect : Rs. Annual contribution from 1-4-1957 to 31-3-58 Pursuant to the General Board's resolution dated 18-12-1957 11,14,602 spindles @ 86 pies 10,743.94 2,077 looms @ 3.12 annas 7,788.75 ------------------ 18,532.69 ------------------ It appears that there was some dispute between the assessee on the one hand and the aforesaid association on the other with regard to that bill and the payment was ultimately made in the previous year relevant to the assessment year under consideration in terms of the assessee's letter dated September 21, 1959, and on that account the assessee claimed deduction of that amount in this year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax liability in appeals and further had not made any provision in its books in regard to the payment of that amount. The view taken by the Supreme Court was that the assessee was entitled to the deduction of that sum being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. That liability did not cease to be a liability because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail. Further, the fact that the assessee had failed to debit the liability in its books of account did not debar it from claiming the sum as a deduction either under s. 10(1) or s. 10(2)(xv) of the Act of 1922. The principle laid down was (p. 367): "Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relevant thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter ? " On the other hand, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863 (All), CIT v. Swadeshi Cotton and Flout Mills P. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imately claim deduction in respect of a business liability even if such liability had not been quantified or paid or even if such liability was being disputed. There the liability was of excise duty that is, one which arose as a result of a statutory provision and certainly as held in Kedar Nath late Mfg. Co. [1971] 82 ITR 363 (SC), the accrual of the liability does not depend upon the quantification or the ascertainment of the liability or on the fact that the liability is being disputed or on the fact that no debit has been made in the account books. In our opinion, the present case is clearly covered by the decision of the Supreme Court in Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC) and the claim of the assessee was clearly allowable. We thus do not agree with the view taken by the Appellate Tribunal. The second question relates to the Pondicherry unit. The assessee had disclosed a net loss of Rs. 10,19,684 in this unit in the profit and loss account.On an examination of the manufacturing and trading accounts the ITO found that there was excessive wastage claimed and production of cloth shown was low. Further, from information gathered from the bank about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and value as per books of declared to the account bank --------------------------------------------------------------------------------------------------------------------------------------------------- Raw Materials: Quantity Value Quantity Value Cotton in bales 901 Bales 3,36,458 905 bales 3,83,515 Bonda Boras - - 160 Bonda 36,000 Boras ------------------ ----------------- ------------------- --------------- Total 901 bales 3,36,458 1,061 4,39,515 ------------------ ----------------- ------------------- --------------- Stock-in-process : Spinning process 71,448 Lbs. 1,02,436 1,50,000 Weaving process 49,781 Lbs. 82,171 2,50,000 Reeled and Unreeled yarn 2,421 Lbs. 3,204 - Loose cloth in warehouse 2,82,238 yds. 1,66,657 - Fonts, Rays 6,586 Lbs. 8,452 8,50,422 Chindies 34,415 Lbs. 12,379 - ----------------------- ------------------ ---------------- Total 3,75,399 12,50,422 ----------------------- ------------------ ---------------- Finished products : Yarn in godown: 10 bales 6,080 46 bales 31,498 3609 Lbs 121 bales 91,675 135 bales 1,32,609 --------------------- ------------------ ----------------- Total 97,75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled at the time of hearing of the appeal and the extract of the same was reproduced in the application and it was prayed that suitable rectification might be made in the light of that chart. While disposing of that application the learned judicial Member observed that they had considered the entire gamut of the facts in this case and that the finding was entirely one of fact and was also based on the finding for the earlier year.Since all the facts had been taken into consideration before recording the finding, in the opinion of the learned judicial Member, there was no mistake apparent from the record which could be rectified. The learned Accountant Member wrote a separate order in which he observed that he would not have been a party to the impugned observations of the Tribunal in para. 24 of its appellate order if the figures given at page 24 of the assessee's paper book or the facts and figures noted by the AAC in para. 26 of his appellate order had not escaped his notice and in his opinion there was certainly a mistake in para. 24 of the Tribunal's appellate order. However, since the mistake was not one which could be rectified under s. 35 ofthe Act of 1922, he agreed with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
