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TMI Blog1990 (11) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... ear with regard to the expenditure incurred relating to managerial remuneration in the earlier years but sanctioned by the Government after the end of the accounting year relevant to the assessment year 1963-64? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction of ₹ 15,800 (Rupees fifteen thousand and eight hundred only) in the assessment year 1963-64 being the difference between the amount of managerial remuneration as sanctioned by the Government of India and ascertained after the end of accounting year relevant to the assessment year 1963-64 and the amount actually debited by the assessee in the assessment years 1959-60. 1960-61 and 1961-62? 3. Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval dated 30-1-1963 was received by it. This sum of ₹ 15,800 was, accordingly, claimed as business expenditure in the income-tax return filed by the assessee-company for the assessment year 1963-64. 3. The ITO disallowed the said claim on the ground that it related to the accounting year relevant to the assessment years 1959-60 to 1961-62. On appeal by the assessee, the AAC confirmed the disallowance made by the ITO. The AAC felt that the department of company law administration had approved managerial remuneration only on 30-1-1963, i.e., long after the close of accounting year relevant to the assessment year 1963-64. He, therefore, felt that the assessee was not entitled to claim deduction in respect of the said sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act, 1956. This was done on the advice of the auditors and notwithstanding that the Government's approval was pending then, this sum of ₹ 22,646 was duly offered for taxation and was taxed in the assessment year 1962-63. Since the Government approved payment of managerial remuneration of ₹ 1,65,800 by its order dated 30-1-1962, the assessee-company, on the advice of its auditors, debited its accounts for the year ending 30-6-1962 which were then under audit at the time when the Government's approval came. This sum was, accordingly, allowable in the assessment year 1963-64. The Tribunal felt that the assessee was perfectly justified in making necessary adjustments in its accounts for the year ending 30-6-1962, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire managerial remuneration of ₹ 1,65,800 was allowable only in the assessment year 1964-65, although such remuneration related to the assessment years 1959-60 to 1961-62. But in this case. Mr. Poddar, the learned counsel for the assessee, submitted that such managerial allowance was already allowed in the sum of ₹ 1,72,646 in the earlier years without waiting for Government's approval and again the excess of ₹ 22,646 as determined by the assessee, on the advice of the auditors, was duly taxed, as offered by the assessee-company in the assessment year 1962-63. This was again done without considering the Government's approval. As such, the Tribunal was fully justified in the background of these facts and particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factually, the deduction of ₹ 15.800 which was part of such business loss can be allowed only In the assessment year 1964-65 and not earlier. Mr. Poddar drew our attention to the decision of this Court in CIT v. Rajendra Trading Co. (P.) Ltd. [19841 146 ITR 637 (Cal.). The controversy in this case related to the claim of business expenditure of ₹ 23,206. This expenditure was claimed by the assessee-company in the assessment year 1966-67 although the same was actually incurred in the immediately preceding year. One of the submissions made before the Tribunal, which was reiterated before this Court on behalf of the assessee, was that in the immediately previous year, the assessed profit of the assessee was ₹ 1,814 and if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der reference, only goes to increase the business loss for the assessment year 1963-64 and ultimately the amount is carried forward to the next year for allowance in 1964-65. Mr. Poddar submits, in our view rightly, that the controversy raised by the department in this reference is wholly academic since there is no tax effect and no loss of revenue is involved. 7. Our attention has also been drawn to the decision of the Allahabad High Court in CIT v. U.B.S. Publishers Distributors [1984] 147 ITR 114 . In this case, the devaluation of Indian rupee took place on 6-6-1966, six days after the close of the relevant previous year. As a result of such devaluation, the assessee's liability to make payment in foreign currency increase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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