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Issues:
1. Application of proviso to section 13 of the Income-tax Act 2. Assessment of commission not received by the appellant 3. Accrual and assessment of commission from sales in Indian States Analysis: 1. Application of Proviso to Section 13 of the Income-tax Act: The case involved the application of the proviso to section 13 of the Income-tax Act regarding the method of accounting adopted by the appellant. The appellant, an agent of a company, claimed to follow the cash basis system of accounting. However, the departmental authorities included a commission amount in the assessable income of the appellant, even though it had not been received in cash during the relevant accounting period. The Tribunal upheld this assessment, stating that the system of accounting adopted by the appellant did not accurately reflect its true income for the year. The court agreed with the Tribunal's decision, emphasizing that the true income of the assessee must be deduced properly, even if the chosen accounting system fails to do so. 2. Assessment of Commission Not Received by the Appellant: The appellant had entered into an agreement with a company where it was entitled to receive commissions on purchases and annual profits. The dispute arose regarding the inclusion of a commission amount in the appellant's assessable income, which had not been physically received during the relevant accounting period. The court noted that the appellant's system of accounting did not reflect the true income, as it delayed crediting itself with amounts payable by the company. Despite the cash basis system claimed by the appellant, the court upheld the assessment based on the proviso to section 13 of the Act, stating that the appellant had immediate access to the credited amounts. 3. Accrual and Assessment of Commission from Sales in Indian States: The case also questioned the accrual and assessment of a commission payable on sales made in Indian States, arguing whether it could be said to have accrued in British India and be assessable there. Referring to a Supreme Court decision under similar circumstances, the court concluded that the commission could be deemed to have accrued in British India. The court highlighted the immediate availability of the credited amounts to the appellant, even if not physically received, justifying the assessment based on the proviso to section 13 of the Act. The Tribunal's decision to confirm the assessment was deemed justified, and the first question was answered against the assessee. In conclusion, the judgment delves into the intricacies of accounting methods, the accrual of income, and the assessment of commissions, emphasizing the importance of deducing the true income of the assessee accurately. The court upheld the assessment based on the proviso to section 13 of the Income-tax Act, considering the immediate availability of credited amounts to the appellant, despite the chosen cash basis accounting system.
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