9911796707
TMI Blog1996 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... excess of the price fixed by the Government ? " The assessment year concerned is 1980-81. The relevant accounting period ended on June 30, 1979. The assessee is a registered co-operative society formed in 1966 with the object primarily to co-ordinate and facilitate the working of affiliated societies and to assist in the promotion and development of consumer co-operation. It is sponsored by the Government of Kerala. The main activities of the assessee are to purchase consumable goods from production centres and distribute the same for sales through district and primary co-operative societies and through retail outlets. During the accounting period relevant to the assessment year in question, as per the orders of the Government of Keral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings evidenced by annexure "A", the assessee claimed deduction of the said amount on the basis of the provision so made stating that there is a liability to the State Government in regard to the excess amount collected. The assessing authority rejected the said claim on the ground that the liability, if any, had arisen only after the close of the accounting period and that too only by virtue of the Government order dated August 17, 1979. The detailed reasons are contained in annexure "A" under item 7. On appeal by the assessee, both the Appellate Assistant Commissioner of Income-tax (Appeals) and the Appellate Tribunal confirmed the order of the Income-tax Officer and dismissed the appeals. The short question arising for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercantile system of accounting is entitled to make a provision for any liability that may be legally incurred during the accounting period notwithstanding the fact that the assessee had not effected payment of the same during the accounting period itself. Here, as we have already found the liability for payment of the excess collection had arisen only by virtue of the Government order dated August 17, 1979, which admittedly falls outside the accounting period ended by June 30, 1979. Therefore, it is clear that the provision made in the accounts after the close of the accounting period pursuant to the Government order dated August 17, 1979, based on which the assessee has put forward a case is not a permissible deduction. We, accordingly, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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