9911796707
TMI Blog1985 (7) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... O, it was firstly not a business loss and further in view of the fact that the assessee was having a mercantile system of accounting, it was not allowable in this year. The facts in this behalf are that the assessee had filed a tender for supply of some sophisticated item based on designs. They could not be supplied to the Government because, according to the assessee, the designs were defective. In the meantime the Director General of Supplies and Disposal floated a risk purchase tender and cancelled the contract of the assessee on account of the risk purchase for the alleged breach of the contract. The Government also recovered a sum of Rs. 1,09,701.20 which included Rs. 14,000 in respect of risk purchase against the tender dated 14-10-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of faulty designs given to him. In view of the fact that the assessee had maintained accounts on mercantile system, the actual recovery of money would not affect the question as to which year the deduction should be allowed. For this purpose, the Commissioner (Appeals) relied upon a decision of the Hon'ble Supreme Court in CIT v. Swadeshi Cotton Flour Mills (P.) Ltd. [1964] 53 ITR 134 which lays down that an employer incurs liability towards bonus when the commission was settled and if the claim for bonus was disputed and referred to the arbitration, it was neither allowable in the year in which the profits were made and in respect of which the bonus was payable nor in the year in which it was debited in the books of account, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case sent up by the Commissioner. It is not disputed on behalf of the assessee that it was still contesting the liability and had taken up the matter in arbitration, but the liability itself had been fully ascertained. In E.C. Bose Co. (P.) Ltd. v. ITO [1982] 2 ITD 149 decided by the Calcutta Bench 'B' of the Tribunal, the assessee had claimed some liability on account of the claims of employees for compensation payable under the Workmen's Compensation Act, 1923. The ITO allowed the claim. The Commissioner withdrew the allowance on the ground that the claim would accrue only when the compensation was actually adjudicated by the Commissioner under section 19 of that Act. On appeal the Tribunal held that in spite of the fact that the liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during any previous year the assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not." With these remarks, we accept the appeal and delete the disallowance. The stay application consequently becomes infructuous and is dismissed. 5. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
