TMI Blog1976 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases made by the company from 1st November, 1959, to 31st October, 1960, Accordingly, Rs. 1,40,000 was debited by the company in its profit and loss account for the year ended on October 31, 1960, as provisions for contingencies. Thereafter, on December 28, 1964, Rs. 1,13,371 was determined to be payable by the company to the sellers for the aforesaid period as additional price by the authorities appointed under the Control Order. While the first appeal filed by the company from the assessment order was pending, Rs. 1,13,371 was reduced to Rs. 18,895 on April 11, 1967, by the authority concerned in terms of second proviso to clause 3A(1) of the Control Order by allowing the pending representations made by the company in that behalf. In the assessment proceedings, the company claimed Rs. 1,40,000 or in the alternative Rs. 1,13,371 as deduction. The Income-tax Officer rejected the said claim on the ground that the liability of the company to pay the additional price did not arise in the accounting year. The Appellate Assistant Commissioner has sustained the said disallowance in the appeal filed by the company, but the Appellate Tribunal, on further appeal by the company, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that season ; or (b) from payment of such part the said amount as the Central Government thinks fit, where the said audited accounts show that the profit which would accrue to the producer for the season concerned, if the said amount is paid, would be less than the profit taken into account in determining the value of 'X ' referred to the schedule. (2) Where the Central Government, having regard to the special circumstances prevailing in any State or part thereof and after consultation with the State Government, is of opinion that the provisions of the schedule should in their application to the State or part thereof, as the case may be, varied or not applied, the Central Government may, notwithstanding anything contained in sub-clause (1), direct that in lieu of the payment provided for therein, payment shall be made in accordance with such other provisions as may be notified in the official Gazette. (3) Any amount payable under this clause may be paid at such time and in such manner as the Central Government may from time to time direct. (4) The following Schedule shall be inserted at the end, namely : " The Schedule ". See clause 3-A(1). The amount to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased at centres other than the factory gate ; (7) ' Y ' means the total sum of the minimum price of sugarcane per maund of kilogram fixed by the Central Government under clause 3(1) and the premium, if any, paid for and approved by the Central Government for payment of price for sugarcane on the basis of quality : Provided that the rebate, if any, allowed in the minimum price aforesaid (excluding a rebate allowed on account of transport charges), shall be deducted from the total sum aforesaid. " The submission of Mr. Pal is that the liability of the company to pay the additional price in the accounting year was contingent or inchoate in view of the second proviso read with the expression " an amount, if found due ", used in clause 3A(1) of the Control Order and the provisions for rebate provided for in the Schedule. It is also his submission that since the amount of additional price was determined after the close of the accounting year, the Income-tax Officer was justified in rejecting the claim of the company. The submission of Mr. Sengupta is that the aforesaid liability of the company was contingent in view of the power of the Central Government under clause 3A(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue that Rs. 1,40,000 provided for by the company for discharging this liability was excessive at the time this provision was made. The income-tax authorities are solely concerned with the relevant accounting year in question for the purpose of assessment. The company has incurred this liability in the accounting year ending on 31st October, 1960 and, therefore, the Income-tax Officer and the Appellate Assistant Commissioner were not justified in disallowing the deduction of Rs. 1,40,000 claimed by the company in the assessment year 1961-62, as rightly contended by Mr. R. N. Bajoria, the learned counsel for the assessee. The difference between Rs. 1,40, 000 and Rs. 1,13,371 can be brought to tax in the accounting year be-inning with the 1st November, 1964, and ending with the 31st October, 1965, and thereafter the difference between Rs. 1,13,371 and Rs. 18,895 can be included in the computation of the total income of the company in the accounting year beginning with the 1st November, 1966, and ending with the 31st October, 1967, under section 41(1) of the Income-tax Act, 1961. In this view of the matter it is unnecessary for us to discuss the cases of Calcutta Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing reasons : " Coming to the appeal of the department, we find that the departmental authorities have allowed half of the export loss during the year under consideration and the other half has been allowed in the subsequent year. The assessee has not come up in appeal for the subsequent year, and therefore, if the department's appeal succeeds, the assessee will not be left with any remedy in the subsequent year. This matter, therefore, should also be decided once again and decision should be taken whether the entire amount of export loss should be allowed in the year under consideration or should be allowed half in the year under consideration and the other half in the subsequent year. For this purpose, it may also be necessary that the export loss of earlier years which might have been allowed during the year under consideration would require verification and adjustment. " The Tribunal having rejected the application made by the Commissioner under section 66(1) of the Income-tax Act, this court, at the instance of the Commissioner, called for the following question under section 66(2) of the Act for its determination : " Whether, on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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