TMI Blog1979 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sale of jute goods. Before the ITO the assessee claimed deduction of Rs. 2,54,064 paid by it for purchase of loom hours, as business expenditure. It also claimed set off of Rs. 11,50,000 received by it from M/s. Tolaram Prakash Chand on settlement of the assessee's claim for damages for breach of certain transferable specific delivery contracts against speculative losses suffered by the assessee on settlement of certain other transferable specific delivery contracts. The ITO rejected both the said claims of the assessee. The assessee had on the 12th March, 1962, estimated and paid advance tax of Rs. 5,60,000 on the basis of a total income of Rs. 17,41,361. In the income-tax return filed subsequently the income was shown as Rs. 25,32,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised his discretion under r. 40(1) and (4) of the I.T. Rules, 1962, in favour of the assessee and should have waived the interest. The AAC held that no appeal against the levy of interest lay and rejected the claim of the assessee. The assessee preferred a further appeal to the Income-tax Appellate Tribunal on the disallowance of the claim of set off of the amount received from M/s. Tolaram Prakash Chand and also against the levy of interest under s. 215 of the I.T. Act,1961 . Revenue also appealed to the Appellate Tribunal against the allowance of the amount spent for purchase of loom hours. The Appellate Tribunal, following the judgment of this court in CIT v. Empire Jute Mills Co. Ltd. [1974] 97 ITR 581, held that the amount spent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid seller and such receipt was damages for breach of the contract. Following the decisions of this court in CIT v. Pioneer Trading Co. P. Ltd. [1968] 70 ITR 347 and Daulatram Rawatmull v. CIT [1970] 78 ITR 503, the Tribunal rejected the claim of the assessee and upheld the order of the AAC. On the imposition of interest under s. 215 of the Act the Tribunal held that the assessee had urged a number of grounds in its appeal before the AAC apart from the challenge to the levy of interest and, following a decision of the Bombay High Court in Mathuradas B. Mohta v. CIT [1965] 56 ITR 269, set aside the order of the AAC and directed him to dispose of the appeal as to levy of penal interest on merits. On the application of the assessee under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a further submitted that the assessee's question No. 2 was also covered by the decision of this court in CIT v. Pioneer Trading Co. Ltd. [1968] 70 ITR 347 and should also be answered in the affirmative and in favour of the revenue. Mr. Sengupta further submitted that the question referred at the instance of the Commissioner is covered by an unreported decision of this court in Income-tax Reference No. 373 of 1969 intituled CIT v. Karam Chand Thapar Bros. (P.) Ltd. [(since reported in [1979] 119 ITR 751 (Cal)] and the necessary directions as given by this court in the said decision should also be given in this case. Dr. Debi Pal, learned counsel for the assessee, agreed with Mr. Sengupta that the assessee's question No. 1 was covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract itself specifically provided for the consequences of its non-implementation or breach. Under cl. (3) the assessee received from its seller the difference between the contract price and the market price and thus both the claim and the receipt of the amount by the assessee was not on the breach of the contract but under the contract itself which made specific provision for payment of such difference. In the instant case, admittedly, the goods were not delivered and the claim of the assessee was settled in terms of the said clause by payment of difference under the contract. Accordingly, he submitted that the decision in Pioneer Trading Co. P. Ltd. [1968] 70 ITR 347 (Cal) did not apply to the facts and circumstances of this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). If the Tribunal finds that the assessee is denying its liability to pay interest at all, then it would reconsider the matter further, if not, and the challenge is only to the quantum or method or manner of imposition of interest, the appeal should be dismissed in limine on this issue. The other questions are answered as follows : (1) The assessee's question No. 1 is answered in the affirmative and in favour of the revenue. (2) The assessee's question No. 2 is also in the affirmative and in favour of the revenue. On the assessee's question No. 1 as to loom hours, an appeal is pending before the Supreme Court in the case of Empire Jute Co. Ltd. [1974] 97 ITR 581 (Cal) and as the assessee desires to go to the Supreme Court on its ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
