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- Application of section 44AC of the IT Act for determining income in the sale of country liquor business - Interpretation of relevant legal precedents from High Courts and Supreme Court Analysis: The case involved two appeals by the assessee against the orders of CIT(A), Faridabad, regarding the application of section 44AC of the IT Act for the assessment years 1990-91 and 1991-92. The assessee, a registered firm engaged in the purchase and sale of country liquor and Indian made foreign liquor, disclosed income based on regular books of accounts. The Assessing Officer (AO) determined the profit of the assessee by applying provisions of section 44AC, deviating from the regular books of accounts. The CIT(A) upheld the computation of income under section 44AC, citing a pending appeal before the Supreme Court related to a jurisdictional High Court decision. The assessee contended that income should be computed under sections 28 to 43C based on the High Court decision in the case of Satpal & Co. The Departmental Representative argued that the income was rightly computed under section 44AC and presented a Tribunal decision supporting this stance. The Tribunal analyzed the submissions and held that the decision of the jurisdictional High Court in the case of Satpal & Co. was binding. The High Court had directed that income of liquor dealers should be computed under sections 28 to 43C of the IT Act. The Tribunal found no evidence to suggest that the High Court decision had lost its binding force due to subsequent Supreme Court orders. Therefore, the Tribunal directed the AO to compute the assessee's income based on the regular books of accounts, following the High Court decision. The orders of the lower authorities were set aside, and the matter was remanded to the AO for fresh assessment, ensuring a fair opportunity for the assessee to be heard. Consequently, both appeals were allowed for statistical purposes.
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