9911796707
TMI Blog1989 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under appeal ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the sum of Rs. 9,73,384 being 'adjustment relating to earlier years' on account of purchases made by the applicant was not admissible as a deduction in the year under appeal ? 3. Whether the finding of the Tribunal that as the applicant was following the mercantile system of accounting it could claim adjustment of the amounts of Rs. 14,53,340 and Rs. 9,73,384 (mentioned in questions Nos. 1 and 2 above) only in the year in which the purchases were made was justified in law in the facts and circumstances of the case ? 4. Whether the finding of the Tribunal was perverse as it did not consider the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppliers were corrected during this year and necessary adjustments were made. The assessee-company maintained accounts on the mercantile system. If the advances were made against purchases, they could be adjusted only in the year in which the purchases were made. For the failure of the assessee to adjust the amount in the appropriate year, the assessee could not claim deduction of this amount in the computation of total income of this year. The assessee had also contested before the Income tax Officer the disallowance of Rs. 23,22,303 being adjustments in respect of earlier years, which consisted of the following amounts : Rs. (i) Purchase 15,40,127 (ii) Salaries, wages and bonus 5,11,324 (iii) Miscellaneous 2,70,852 -------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years and, therefore, the assessee could not claim deduction of the above amounts in the year under appeal, since these adjustments related to earlier years. It was specially emphasised by the Appellate Assistant Commissioner in his order as follows : "The Paharpur Works was closed only for about four months from March, 1970, to June, 1970. The appellant's accounting year is the financial year. Therefore, the Paharpur Works was closed in the beginning of the financial year 1970-71. The appellant did not have access to the books of account kept in the Paharpur Works for about four months only in the beginning of the financial year 1970-71. Therefore, the appellant could have made the adjustments after July, 1970, up to March 31, 1971, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the closure of the Paharpur Works. The factory was under lockout. The books of account Were not accessible to the company. Therefore, it was not possible to maintain accounts and make necessary adjustments in the accounts on the basis of the mercantile system of accounting. This argument of Mr. Pal cannot be accepted. The company must have had some accounts of goods despatched and of advances of money made. The business of the company did not come to an end because of the lockout at the Paharpur Works. The business of the company was going on and it is difficult to believe that no accounts were being maintained for despatches of goods being made or advances being received or payments being made by the company. Moreover, the lockout ..... X X X X Extracts X X X X X X X X Extracts X X X X
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