1993 (1) TMI 4 - HC - Income Tax

Summary

Issues involved:
The issue involves the interpretation of whether the right to receive transport charges should be assessed in the year of dispute settlement or the year the supplementary bill was prepared.

Judgment Details:

The Income-tax Appellate Tribunal referred a question under section 256(1) of the Income-tax Act, 1961 regarding the assessment of transport charges for the assessment year 1978-79. The assessee, an association of persons, had a specific agreement with the Army Purchase Organisation for milling and supplying wheat, entitling them to transportation charges at agreed rates. The dispute arose when the assessee submitted a supplementary bill for Rs. 1,96,906 due to the actual distance being more than initially calculated. The Commissioner, u/s 263 of the Act, canceled the assessment order, stating that the amount accrued during the relevant year. However, the Tribunal ruled in favor of the assessee, noting that the right to receive the amount only arose when the dispute was finally settled, not when the supplementary bill was submitted.

The Tribunal's decision was based on the fact that the dispute between the assessee and the Army Purchase Organisation was resolved years later by the High Court, indicating that the right to receive the amount did not exist at the time of submitting the supplementary bill. The Tribunal emphasized that the mere filing of a claim does not automatically confer the right to receive the amount. Therefore, the Tribunal concluded that the supplementary bill amount should not be considered as income for the assessment year 1978-79, as it was only included in the return when actually received.

In conclusion, the High Court answered the question in favor of the assessee and against the Revenue, stating that the right to receive the transport charges should be assessed in the year when the dispute was finally settled, not when the supplementary bill was prepared. No costs were awarded, and a copy of the judgment was to be transmitted to the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati.