TMI Blog1978 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived from loans and advances. Its period of account ends on the 30th April each year. The assessee used to maintain its accounts on the mercantile basis. By a resolution of the board of directors of the assessee passed on the 17th March, 1966, it was resolved that with effect from the then current accounting year, i.e., the 1st May, 1966, the assessee would change its method of accounting from mercantile basis to cash basis and this new method should thereafter be regularly followed from year to year. As a result of this change from the 1st May, 1967, onwards the assessee brought into its account whatever interest it actually received and not what was receivable. During the assessment years involved the assessee was entitled to rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that so far as.B. L. Bagla was concerned there had been no payment of interest whatsoever since 1961 and that the entire dues of B. L. Bagla ultimately had to be written off at the end of the accounting year 1972. It was found further that since 1961, payments received by the assessee from Messrs. Surajmal Nagarmal had been next to nothing and that during the four assessment years there were only two payments, viz., a sum of Rs. 1,000 paid in 1968-69 and a sum of Rs. 5,000 paid in 1970-71. It was contended on behalf of the assessee that the assessee was compelled to pay tax on amounts which it had not received and was not likely to receive and, therefore, the directors of the assessee resolved to change the method of accounting so that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the amount of interest received from Messrs. Surajmal Nagarmal in respect of loan advanced to the said firm by the assessee is not includible in the assessment years 1968-69, 1969-70 and 1970-71 and whether the Tribunal was right in law in holding that the amount receivable from Surajmal Nagarmal and Sri B. L. Bagla in respect of loans advanced to them by the assessee is not includible for the assessment year 1971-72 ?" None appeared at the hearing on behalf of the assessee. Mr. Bagchi, learned advocate for the revenue, contended that it had been found as a fact by the Income-tax Officer that Messrs. Surajmal Nagarmal controlled the assessee and this was unchallenged and uncontroverted. The Tribunal not having come to any contrary find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d New Victoria Mills Co. Ltd. v. Commissioner of Income-tax [1966] 61 ITR 395 (All). The facts here were that the assessee, a limited company, had claimed deduction of bonus on the basis of actual payment throughout from 1943 to 1947. For the assessment year 1949-50, the previous year ending on the 31st December, 1948, the assessee claimed deduction for provision for bonus which was paid not in the relevant previous year but in the following year. At all stages from the Income-tax Officer up to the Tribunal this claim for deduction was disallowed. On a reference to the Allahabad High Court, the contentions of the revenue were upheld. The High Court observed at page 397 of the report as follows: "It is no doubt open to the assessee to chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his contentions Mr. Bagchi cited a decision of the Supreme Court in the case of Commissioner of Income-tax v. A. Krishnaswami Mudaliar [1964] 53 ITR 122, where the Supreme Court laid down that whatever be the method of book keeping, in computing the profits of the year, the stock-in-trade must be taken into account. This decision appears to be of little relevance in the facts of the instant case. Mr. Bagchi could not cite any authority for the proposition that even where a cash system of account is followed, section 5 of the Act could be applied and any item brought to tax on accrual basis. In any event this new case was never agitated at any earlier stage and on the authority of the Supreme Court in Commissioner of Income-tax v. Kirkend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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