9911796707
TMI Blog1980 (3) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of Rs. 43,890 being the purchase tax payable on the amount. The assessee had purchased 5,093 quintals of Reason from the Forest Department of Government of Uttar Pradesh. The assessee, a Government Department controlled by a Board of Directors of U. P. Government, manufactures turpentine and Rosin. In the relevant year, the assessee had purchased the said quantity of resin from the Forest Department. Tentatively, it was agreed that the price would be charged Rs. 166 per quintal. However, in the following months some correspondence followed regarding the final price at which the commodity was to be charged with. A meeting was called on26th March, 1974which was presided over by the Chief Secretary to the Government of Uttar Pradesh in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTR (All) 243 : 117 ITR 121. The counsel for the assessee made out a strong plea that the liability for this additional price whether it was communicated before or after the expiry of the accounting year, should relate to the transaction which took place within the accounting year. That being so, the liability cannot be shifted to any other year but the year in which the contract had been made and the supplies and deliveries had taken place. The decision arrived at in the aforesaid meeting bound both the parties. Formal communication will not affect incidence of the liability. It is the settled law that if the accounts are maintained on the mercantile basis then the deduction has to be made in the year in which liability accrues. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat as a liability in accounts and claim as a deduction in the return from the taxable income of the year. We, therefore, uphold the order of the AAC on this score and dismiss the appeal of Revenue on this ground. 5. There is another ground which has been raised by the Revenue in this appeal. The Revenue disputed the finding of the AAC as erroneous in respect of the relief of development rebate and depreciation on a sum of Rs. 1,29,853. The sum in effect represents the amount incurred travelling, Licence fee, air tickets etc. It transpires that both development rebate and depreciation on machinery valued at Rs. 33,94,746 which were installed by the assessee during the year under consideration. The gross value of Rs. 33,94,746 included als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tyvs. Polychem Ltd. (1975) 98 ITR 579 (Bom). He also made an alternative plea that in case the appeal is allowed on this point, the assessee should be allowed the benefit of deduction from the cost as any other Revenue expenses which were incurred during the year under consideration. 7. Having heard both the parties, we are inclined to agree with the assessee in this matter. The issue is no longer an open one and has been well settled by the decision of the Supreme Court in well known case of Challapalli Sugars Limited vs. CIT (1975) 98 ITR 167 (SC) and also the case of CIT vs. J.K. Cotton, Spinning Weaving Mills Limited (1975) 98 ITR 153 (All). In the cost of machinery and plant, not only the price but also the expenses incurred to acq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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