9911796707
|
Home
Issues Involved:
1. Deduction of Rs. 1,40,000 as a provision for contingencies. 2. Allowance of export loss of Rs. 2,48,000. Summary: Issue 1: Deduction of Rs. 1,40,000 as a provision for contingencies The assessee, a public limited company owning a sugar mill, claimed a deduction of Rs. 1,40,000 or alternatively Rs. 1,13,371 as a provision for additional price payable to sugarcane growers for the assessment year 1961-62. The Income-tax Officer rejected this claim, stating the liability did not arise in the accounting year. The Appellate Assistant Commissioner upheld this disallowance, but the Appellate Tribunal directed the department to reconsider the matter. The High Court held that the liability to pay the additional price is a statutory liability accruing at the point of purchase of sugarcanes, and the company was entitled to make a provision for this liability. The court concluded that Rs. 1,40,000 is a permissible deduction in the computation of the total income for the assessment year 1961-62. Issue 2: Allowance of export loss of Rs. 2,48,000 The company debited Rs. 2,48,000 as a provision for loss on exportation of sugar. The Income-tax Officer added back this amount, finding that the final order and export occurred after the accounting year. The Appellate Assistant Commissioner allowed half of the export loss, but the Tribunal remanded the appeal for reconsideration. The High Court agreed with the revenue that the Tribunal exceeded its jurisdiction in remanding the matter on the grounds stated. The court directed the Tribunal to decide whether the Appellate Assistant Commissioner was justified in allowing half of the export loss in the assessment year under appeal. Conclusion: The High Court ruled in favor of the assessee for the deduction of Rs. 1,40,000 and in favor of the revenue regarding the remand of the export loss issue. The parties were directed to bear their own costs.
|
