1982 (5) TMI 123

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..... n the assessment of that assessment year, no income pertaining to that assessment year was assessed. For the subsequent asst. yr. 1976-77 the assessee had shown income of Rs. 45,000 from the sale of Malayalam version and for the asst. yr. 1977-78 an income of Rs. 45,000 from the Tamil version. At the same, the income of Rs. 25,80,8000 had been returned in the present assessment year form the sale of Telugu version. 3. On a perusal of these facts, the CIT came to the conclusion that the assessee had while uniformly following the mercantile system in respect of the similar transaction and returned the income in the previous year in respect of the agreement so concluded, switched over to cash system in respect of Tamil and Malayalam dubbing .....

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..... towards the contract and treated as income accrued in the previous year relevant to the succeeding assessment years and duly returned for assessment. According to the assessee therefore the CIT had proceeded on an erroneous assumption that there was a change in the system of accounting whereas the assessment made was in accordance with the mercantile system of accounting which the assessee had consistently followed and was not, therefore, required to be revised as erroneous. 5. But, we are unable to accept this contention of the assessee in view of the decision of the Supreme Court in the case of Union of India vs. M/s Chaman Lal Loona and Co. AIR 1957 (SC) 652. The Supreme Court observed as under; "The distinction between the two class .....

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..... for specific performance of the promise by the assessee to give the prints etc., for dubbing purposes. Therefore even accepting that case of the assessee that he was consistently following the mercantile system of accounting it must be held that the amount payable under the agreements in question accrued on the dates on which payments were due of the agreements and the accrual of such income did not depend upon the assessee carrying out its promise which was only the consideration for the amount received. The CIT was, therefore right in his conclusion that the amounts receivable under the agreements were to be taken into account in assessing the income of the previous year relevant to the asst. yr. 1975-76 even though it may not be correct .....

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