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Issues Involved:
1. Addition of Rs. 9,08,787 receivable from M/s Bharat Coking Coal Ltd. (BCCL) and its deletion by the CIT (Appeals). Issue-Wise Detailed Analysis: 1. Addition of Rs. 9,08,787 Receivable from BCCL and its Deletion by CIT (Appeals): The primary issue revolves around the addition of Rs. 9,08,787, which the assessee claimed as receivable from BCCL due to additional transportation expenses incurred because of damaged roads caused by floods. The assessee raised bills from September 1982 to December 1982 but did not record these in its accounts. The Income Tax Officer (ITO) added this amount to the assessee's income, arguing that since the assessee maintained accounts on a mercantile basis, the income had accrued despite the bills not being entered into the account books. The CIT (Appeals) deleted this addition, relying on the Supreme Court decisions in CIT v. Shoorji Vallabhdas & Co. and State Bank of India v. CIT. The CIT (Appeals) concluded that the amount of Rs. 9,08,787 neither accrued to the assessee nor was received during the relevant year. The CIT (Appeals) also noted that the High Power Committee of Coal India Ltd. (CIL) had only sanctioned Rs. 18,22,990 out of the total claim of Rs. 26,02,950, which included the disputed amount of Rs. 9,08,787. Since the assessee had already received Rs. 16,75,000, the balance payable was Rs. 1,47,990. The departmental representative argued that the CIT (Appeals) did not provide adequate opportunity to the ITO to comment on the materials received from CIL. He contended that the mere raising of bills, even if not entered into account books, indicated income accrual under the mercantile system. He cited several cases to support his argument that the income had accrued to the assessee. The assessee's counsel countered that merely raising bills without corresponding entries in the account books did not constitute income accrual. He emphasized that only "real income" should be taxed, not hypothetical income, and cited cases to support this view. Upon review, it was found that the assessee raised bills over the agreed contract rate due to additional expenses. However, the income had not accrued as the bills were not accepted and passed by BCCL. The principle of "real income" was upheld, meaning income must either accrue or be received to be taxable. The Supreme Court's decision in Shoorji Vallabhdas & Co. was cited, stating that hypothetical income should not be taxed. The judgment concluded that the Rs. 9,08,787 did not accrue to the assessee during the relevant year and should not be taxed. However, the balance amount of Rs. 1,47,990, which was sanctioned by the High Power Committee, was considered as accrued income for the assessment year 1983-84. The assessee was granted relief of Rs. 17,60,797 (Rs. 9,08,787 - Rs. 1,47,990). It was also noted that if the assessee could not recover the Rs. 1,47,990 from BCCL or CIL, the ITO should allow the assessee to write off or set off this amount against its profits in subsequent assessment years as per the law. Conclusion: The judgment primarily focused on the principle of "real income" and concluded that the disputed amount of Rs. 9,08,787 did not accrue to the assessee and should not be taxed. However, the balance amount of Rs. 1,47,990 was considered as accrued income for the relevant assessment year, with provisions for write-off if the amount remained unrecovered.
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