TMI Blog1986 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... yrs. 1976-77 to 1979-80. It was stated before the ITO on behalf of the assessee that house tax was not paid as factory building was declared outside the municipal limits vide Director of Local Bodies Chandigarh's order dt. 12th Nov, 1970. The said order of the Director, Local Bodies stood cancelled vide Punjab Government Notification dt. 24th July, 1974. Under which the whole village Banwari where the assessee's factory is located was brought within the municipal limits. The assessee challenged the order of the Punjab Government by filing a writ petition in the High Court of Punjab and Haryana which was dismissed on 29th April, 1982. In the mean-time, the Municipal Committee, Rajpura asked the assessee to pay the demand which was ultimatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, profits and gains of business are to be determined of the method of accounting regularly employed by the assessee. Since in this case, the method of accounting employed by the assessee was mercantile and the liability was created as soon as the demand was raised the house-tax liability was not allowable as an expenditure for the assessment year under appeal. He therefore rejected the claim. The CIT(A) has upheld the same. 4. It has been urged before us by the ld. counsel for the assessee that the matter was in dispute before the Hon'ble Punjab and Haryana High Court. Since the liability had not crystallised, it was not claimed in the relevant accounting periods. He further submitted that wince it was paid in the accounting per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the judgment of the Punjab and Haryana High Court in the case of CIT vs. United India Woollen Mills (1981) 24 CTR (P H) 244: (1981) 132 ITR 457 (P H). He therefore, supported the order of the CIT(A). 5. We have carefully considered the rival submissions. The submission by the assessee before the lower authorities was that the liability had not crystallised as the dispute was pending before the Hon'ble High Court. We have discussed above the various stages of the litigation. The writ petition before the High Court was in relation to the levy of octroi and not house-tax. In fact the house-tax levied by the Municipality was challenged before the Municipal Authorities which was rejected and thereafter no appeal was filed. The liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had received cash credit from this concern. The assessee was repeatedly asked by the ITO to give evidence regarding the genuineness of the credits but the assessee failed to do so. The ITO therefore, worked out the peak credits in this account at Rs. 23,000 on 16th Nov., 1979 and treated the same as the assessee's income under s. 68 of the Act and included in the total income of the assessee. Before the CIT(A) the assessee filed an affidavit from M/s. Jiwan Dass Sons which was not admitted by him as the assessee had failed to avail of the opportunity allowed by the ITO. He further observed that even from the affidavit furnished it was clear that Shri Jewan Dass was not a man of means and could not afford to advance such a huge advance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee claimed miscellaneous expenses of Rs. 25,800. The ITO disallowed Rs, 2,000 observing that expenses were of inadmissible nature. The CIT(Appeals) has observed that the disallowance appears to have been made for unvouched, undetailed and inadmissible expenditure. He, therefore, confirmed the disallowance. No material has been brought before us on behalf of the assessee to show that the expenditure did not contain items of inadmissible nature. The disallowance confirmed the CIT(A) is, therefore, upheld. 11. The Sixth ground is that the ITO has erred in law in disallowing under s. 40(b) interest paid by the assessee to partners in their representative capacity. At the time of the hearing of the appeal the assessee sought permis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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