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TMI Blog1965 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... f the court was delivered by MANCHANDA J.--This is a case stated under section 66(1) of the Act. The question referred is : " Whether, on the facts and circumstances of the case, the sum of Rs. 10,692 is an admissible deduction ? " The material facts are these. The assessee is a dealer in cloth. The assessment year is 1958-59, the previous year being the year ending 21st August, 1957. On that date, which was the last day of the year of account, the assessee debited a sum of Rs. 29,482 in its accounts as additional sales tax payable under the U. P. Sales Tax (Amendment) Act, 1956, which replaced the Ordinance No. XI of 1956 dated the 31st March, 1956, whereby the sales tax was raised from 3 pies and 6 pies to one anna per rupee. The valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a liability on the assessee to make that payment. It is well settled that even under the mercantile system of accounting no deduction can be made in respect of a liability which has not definitely arisen. Before a legitimate debit can be raised it must be in respect of an ascertained and enforceable liability. If the liability could not have been enforced on the date on which the debit was raised it will not be allowed even under the mercantile system of accounting. Anticipated losses and contigent liabilities cannot be claimed. Even if the liability in future is likely to be imposed then too no liability can be raised as the liability will be an unascertained one and not an enforceable one. Just as no income can accrue until a person has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fiction about retrospective operation of the Amendment Act. If, as a result of the said fiction, we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income-tax Officer was justified in the present case in exercising his power under section 35 and rectifying the said mistakes. " The Supreme Court laid down in the latter case that " a court of appeal . . . must give effect to the law as it stands if the law has, at some stage anterior to the hearing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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