9911796707
TMI Blog1997 (7) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... Development Corporation Limited in respect of the earlier years is an admissible deduction in computing the income of the assessee for the assessment year 1976-77? (ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal's finding that the rent of Rs. 88,127 was ascertained and became payable only during the year ended September 30, 1975, is sustainable in law especially when the demand was raised on January 20, 1976, consequent to the Government order dated August 26, 1975?" The assessee is a registered firm doing business in manufacture of containers. It was a sub-allottee of a shed in Guindy Industrial Estate in 1966. The assessee thought that no rent is payable to the Government by the sub-allottee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot be allowed as a deduction in the assessment year 1976-77. According to learned standing counsel for the Department, the amount is payable at the end of every month. If the accumulated rent is paid on a subsequent date, it cannot be allowed as a deduction in that year. However, the case of the assessee is, the assessee was under the impression that he need not pay the rent since the assessee was permitted to occupy the portion by the regular tenants. But later on, the Government by an order dated August 26, 1975, directed the Director of Industries to collect 100 per cent rent from both the chief tenant and the sub-tenant. Hence, in view of the abovesaid order, the arrears of rent are payable in accordance with the Government order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of Rs. 1,03,743 consisting of 100 per cent. rent of shed A-11, Industrial Estate, from February 1, 1966, to January 31, 1976. On the basis of the above demand, which was received in January, 1976, the assessee provided in the accounts of the firm made up to September 30, 1975, the sum of Rs. 99,839 being the rent payable to the Tamil Nadu Small Industries Development Corporation Ltd., for the period February 1, 1966 to September 30, 1975. According to the assessee, inasmuch as the provision was made for payment of arrears of rent as per the Government order dated August 26, 1975, the arrears of rent claimed by the Government is allowable as a deduction in the assessment year 1976-77. In National Newsprint and Paper Mills Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that in the present case the liability to pay the rent arose every month or every year. Since the assessee was a sub-lessee, the Government thought it fit to regularise the lease and collect full rent for the shed both from the chief tenant and the sub-tenant by an order dated August 26, 1975. The assessee was compelled to make a provision in the account for payment of the said amount since the assessee was following the mercantile system of accounting. It is no doubt true that the demand for payment of arrears of rent was issued on January 20, 1976, which falls outside the year of account but the Government order dated August 26, 1975, falls within the accounting year relevant to the assessment year under consideration. On the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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