TMI Blog1978 (4) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 31 st March, 1962, the ITO in the course of assessing the assessee to income-tax found that in the accounts of the assessee, the credit balance under the head " Bihar sales tax " amounted to Rs. 81,036 after adjusting Rs. 69,146, being the balance in the earlier year. The difference of Rs. 11,890 was found to have been collected by the assessee in the year in question. As in the earlier year, the ITO added back the said amount in computing the income of the assessee. Credit balance under the head " Central sales tax " was found to be Rs. 9,072 at the close of the accounting year, without any debit during the year, and the said amount was similarly added back. Being aggrieved, the assessee appealed to the AAC, who confirmed the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred the following questions as questions of law arising out of its aforesaid order : "(1) Whether, on the facts and in the circumstances of the case, the sums of Rs. 11,890 and Rs. 1,380 being the Bihar and Central sales tax collections respectively and paid over in the very next year to the Government could be allowed as deduction in the assessment for 1962-63 on the assessee which maintains its accounts on mercantile basis?" "(2) Whether, on the facts and in the circumstances of the case, the sum of Rs. 7,692 having been taxed in the assessment year 1965-66 could also be added in the assessment year 1962-63 ? " At the hearing no one appeared on behalf of the assessee. Mr. B. K. Bagchi, learned counsel for the revenue, contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment... An assessee who follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed. It can again not be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date. " (b) Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 (SC). The facts in this case were that the assessee carried on business, inter alia, as an auctioneer. In r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bureau P. Ltd. v. CIT [1977] 110 ITR 385 (Cal), where it was reiterated by this court as follows (p. 391) : " As clearly enunciated by the Supreme Court, the liability to pay sales tax arises the moment sale or purchase is effected. The fact that that liability has not been quantified for payment, which the law enjoins an assessee to do, is not relevant in determining accrual of legal liability. It is also clearly established by the decision of the Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. v. Commissioner of Income-tax [1971] 82 ITR 363 (SC). If that is the position, in order to determine that liability where the assessee had not paid the amount, it must be, according to the scheme of the Sales Tax Act, an estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,692, though collected on account of Central sales tax, was never paid and the assessee offered the said amount for taxation in the assessment year 1965-66. Admittedly, the amount had been collected in the assessment year 1962-63 and formed part of the trading receipts of the assessee in that year. It was not the case of the assessee before the Tribunal that the said amount should be allowed as a deduction because the same was genuinely estimated to be a liability. The only contention was that this amount had been offered for taxation and assessed in the assessment year 1965-66 and, therefore, it should not be again assessed in the year 1962-63. This contention is erroneous and we do not accept the same. The amount in dispute, that is, Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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