9911796707
TMI Blog1989 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1961-62 ?" The assessment is in respect of the assessment year 1961-62, for which the relevant accounting year was the year ended on March 31, 1961. The facts found by the Tribunal, as stated in its order, are as follows : "One of the activities of the assessee was acting as principal broker for the supply of jute to jute mills. The assessee entered into contracts with the jute mills in that respect. One of the jute mills was New Central Jute Mills Co. According to the contracts with the said jute mills, the assessee agreed to shoulder the loss which the said jute mills might incur on account of the failure of the suppliers of raw jute to the said mills for whom the assessee had acted as broker. In the year under consideration, six pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellate Assistant Commissioner, however, affirmed the order of the Income-tax Officer on this point. The assessee thereupon came up in appeal to the Tribunal. The Tribunal, after considering the agreement by which the assessee had agreed to bear the losses suffered by jute company on account of failure of the suppliers to supply raw jute for whom the assessee had acted as a broker and after considering the subsequent agreement dated March 29, 1961, held that none of the six parties who had agreed to supply raw jute to the New Central Jute Mills Co. could be treated as debtors in respect of the losses suffered by the New Central Jute Mills Co. The Tribunal further held that the provisions of section 36(1)(vii) of the 1961 Act, or the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed in this year. Lastly, it was argued that there was no liability to pay damages and no such liability arose on the basis of the original agreement and there was no justification for any payment and there is no question of loss having arisen in the facts of this case. It was also argued that, on the basis of the agreement, the assessee became entitled to share 50 per cent. of the realisations that might be made by the New Central Jute Mills Co. Ltd. from the defaulting parties and the loss would arise only if the assessee failed to recover its 50 per cent. share of losses from those parties and that the loss claimed by the assessee did not arise in the year under consideration. The Tribunal, after consideration of the rival submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the assessee to bear 50 per cent. of the losses suffered by the New Central Jute Mills Co. Ltd. Subsequent realisations, if any, can be taken into consideration in determining the income of the assessee in the year in which the realisations are made. In the circumstances of the case, it cannot be said that the assessee did not suffer the losses claimed by it on the basis of the agreement dated March 29, 1961 with New Central Jute Mills Co. Ltd. The payment of losses by the assessee is also not ex gratia entered into by the assessee with the New Central Jute Mills Co. Ltd. We, therefore, affirm the order of the Appellate Assistant Commissioner." There is no dispute that the assessee had paid the amount to New Central Jute Mills Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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