9911796707
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Issues:
1. Application under Sub-section (3), Section 66, Income tax Act (11 of 1922) for requiring the Commissioner of Income Tax to state a case on alleged points of law. 2. Assessment of profits from timber business for the year 1926-27 based on the mercantile system of accounting. 3. Commissioner of Income Tax declining to refer certain points of law to the Court. 4. Points raised regarding the method of accounting, profits calculation, and evidence justification for profit estimation. 5. Dispute over the findings of the Assistant Commissioner and the application of a flat rate of profits on turnover. 6. Legal implications of maintaining accounts on the mercantile system and the absence of profit and loss account and stock book. 7. Discretion of the Income Tax Officer in profit computation and the absence of objections in previous assessments. 8. Justification for the inclusion of sales made in April in the income for the accounting year. Analysis: The judgment involves an application under the Income Tax Act for the Commissioner to state a case on alleged points of law arising from the assessment of profits from a timber business. The Assistant Commissioner found that the petitioner maintained accounts using the mercantile system, where entries were recorded based on transaction dates, not payment dates. Sales made in March but accounted for in April were included in profit calculation. The Commissioner declined to refer the points of law to the Court, leading to the application. The petitioner raised issues regarding the method of accounting, profit calculation, and evidence justifying profit estimation. The judgment addresses the contention that the accounts were maintained on the mercantile system, a factual finding by the Assistant Commissioner. The Court found that the finding was based on evidence, including an audit of the petitioner's account books. The absence of a profit and loss account and stock book does not necessarily negate the use of the mercantile system if the finding is supported by evidence. The Court also noted the lack of objection to previous assessments based on a flat rate of profit, indicating a regular method of accounting by the petitioner. Regarding the inclusion of sales in April for the accounting year, the Court found that the sales were made earlier in the year, justifying their inclusion in the profit calculation. The application of a flat rate of profits on turnover was deemed justified, especially considering consistency in previous years and the absence of objections. The judgment emphasized the discretionary power of the Income Tax Officer in profit computation, requiring a showing of illegal or arbitrary exercise for a point of law to arise. In conclusion, the Court dismissed the application, stating that no question of law arose concerning the method of accounting, profit calculation, or profit estimation basis. The judgment was concurred by another judge, Broadway, leading to the dismissal of the application with costs.
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