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TMI Blog1989 (8) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ame into force for the asst. yr. 1984-85 and not available for 1983-84. The controversy lies in a narrow compass, though a bit interesting. There is no dispute that if the amendment is to be taken to be effective for the year under account. the assessee's claim has to be accepted. The amendment came into effect from the 2nd April 1983 1st April, 1983 was a Sunday. 3. The learned counsel submitted that although as per a Special Bench decision of the Tribunal in Rajapalayam Mills Ltd. vs. ITO (1986) 26 TTJ (Mad) 311 : (1986) 18 ITD 114 (Mad), the IT (Fourth Amendment) Rules, 1983, which was brought into effect from 2nd April, 1983 would not apply to the asst. yr. earlier to 1984-85, yet first of April, 1983 being a Sunday, the Fourth Amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasion to consider the theory of diversion of income by an overriding title as such argument was never canvasses before them. Taking this aspect into account, we are of the view that the decision of the Andhra Pradesh High Court in Deccan Wine And General Stores case will not be applicable to the facts of this case." It is in this context that it was forcefully submitted before us that in the Special Bench decision the argument that 1st April, 1983 was a Sunday and, therefore de hors the amendment being made effective from 2nd of April 1983, it should be taken to have come into effect for all intent and purpose w.e.f.1st April 1983 and, therefore, applicable to the asst. yr. 1983-84 was not advanced. The learned departmental representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AC (Asst.) allowed retainer fee at the rate of Rs. 750 per month for 3 months. Viz., Jan., Feb., and March, 1982 the remainder sum viz. Rs. 25,000 which pertained to the assessment year was settled on 15th May, 1982 and the fees paid to her. The learned Commissioner (A) took the view that considering the business expediency, there was no need to have the services of Mrs. Patil, the non-settlement of the salary in the relevant accounting year in mercantile system of accounting being secondary, confirmed the disallowance. 7. We have considered the matter carefully. There is no dispute that Mrs. Bhanu Patil is not related to any director of shareholder of the company or in a position to influence the payment in any other manner. That being so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng this issue, that the payment of Rs. 25,000 which related to the services rendered in the immediately preceding year in respect of which no provision was made by the company in the current year as also discussed by the learned Commissioner we are satisfied on the basis of various authorities including the view taken by the apex Court in CIT vs. Swadeshi Cotton And Flour Mills Pvt. Ltd. (1964) 53 ITR 134(SC) that in case of disputed amounts liability of the assessee arises in the year in which such dispute is settled. Their Lordships further observed as under: "An employer who follows the mercantile system of accounting incurs a liability towards such claim only when the claim is amicably settled". Applying the aforesaid ratio there remai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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