1978 (10) TMI 59 - AT - Income Tax

Summary

Issues:
1. Whether the Tribunal had sufficient material to oppose the claim that a firm was not dissolved or discontinued.
2. Whether a certain amount received should be considered as taxable business income for a specific assessment year.

Analysis:

Issue 1:
The Tribunal dismissed the departmental appeal regarding the assessment of the assessee for the year 1973-74. The firm in question had discontinued its business, and the assessment year was based on the Diwali Samvat year. A suit was filed against a debtor for recovery, resulting in a consent decree for payment. The Tribunal found that the business of the firm had been discontinued, and the income did not arise from the business. The Tribunal also noted that the income accrued when the City Civil Court passed the decree and not in the relevant assessment year. The Tribunal rejected the argument that the income should be included in the assessment for 1973-74. The Tribunal held that no question of law arose from its order as the findings were based on factual considerations and relevant material.

Issue 2:
The Tribunal assessed whether a certain amount received should be considered as taxable business income for the assessment year 1973-74. The Tribunal found that the method of accounting of the firm was mercantile and that the income, if any, accrued before the relevant assessment year. The Tribunal held that the income cannot be taxed merely based on the receipt date and must align with the method of accounting regularly employed by the assessee. The Tribunal concluded that no question of law arose from its order as the findings were based on factual considerations and were not challenged by the Department.

In conclusion, the Tribunal dismissed the departmental appeal and held that no referable question of law arose from its order. The Tribunal's decisions were based on factual analysis and relevant material, ensuring that the income was assessed in accordance with the appropriate accounting method and the circumstances surrounding the receipt of the amount in question.