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TMI Blog1985 (10) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the sum of Rs. 67,299.90 is an allowable revenue expenditure in the assessment of the assessee for the assessment year 1968-69 ? " Counsel are agreed that the first question is covered by the unreported decision of this court in the case of the assessee itself (Income-tax Reference No. 26 of 1965 decided by Kantawala C.J. and Tulzapurkar J. on July 26, 1974). The answer to the first question must be, it is agreed, in the affirmative and in favour of the assessee ; the assessee shall be entitled to the allowance in the proportion applicable at the relevant time. Counsel are also agreed that in view of the decision of this court in CIT v. Shree Changdeo Sugar Mills Ltd. [1983] 143 ITR 469, the second question must be answered in the affirmative and in favour of the assessee. The first and second questions will, therefore, be so answered without elaboration. The facts that we state now relate to the third question, The assessment year involved is 1968-69, the previous year having ended on September 30, 1967. The assessee had an overdraft bank account. It utilised the overdraft for the purpose of payment of advance tax and/or other taxes. Interest attributed to bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le by the assessee to the bank. It was noted by the Appellate Assistant Commissioner that the assessee's entire profit of about rupees twenty-seven lakhs for the year in question had been banked by December 15, 1969, but had not been credited in the overdraft account by that date. It was urged before the Calcutta High Court that where the profits of the assessee's business were sufficient to cover the payment of advance tax during the accounting year, if such amount was paid from a bank account which included the amount of profits as well as the overdraft taken for the purpose of business, the presumption was that the tax was paid out of the profits and not out of the overdraft. It was urged that since the profits for the year in question far exceeded the liability for advance tax, the presumption was that the tax was paid out of the profits for the year and not out of the overdraft, though the profits were put into the overdraft account. Having regard to the aforementioned facts, the Calcutta High Court found that the profits were sufficient to meet the tax liability and that they were deposited in the overdraft account. It was, therefore, presumed that in its essence and true cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal inquiring into the facts which would have formed the foundation of the argument. To send the matter back to the Tribunal to prepare a supplementary statement of case would be tantamount to entertaining an argument not advanced before the Tribunal and asking it to collect evidence anew. In the circumstances, the third question will have to be answered in the negative and in favour of the Revenue. This brings us to the fourth question. The facts relevant to this question are, we are afraid, not adequately stated in the statement of case. For a fuller appreciation thereof, we have had to take recourse to the order of the Appellate Assistant Commissioner. The amount of Rs. 67,299.90 referred to in the question was in regard to expenses for extra staff engaged by the Maharashtra State Farming Corporation Ltd. for loading and unloading trucks and tractors with sugarcane purchased by the assessee from the MSFC, for the collection of fallen settis and the salaries and wages of extra staff at the factory gate and contribution to the employees' provident fund for the period November 25, 1964, to May 6, 1965. The amount was covered by five bills of the MSFC. The sugarcane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year in question, the bills were finally settled and the amount reduced to less than half, the liability of the assessee had not been finally determined. It was only then that the liability for payment of the bills accrued against the assessee. Accordingly, the expenditure of about Rs. 24,000 thereon pertained to the relevant assessment year. In Swadeshi Cotton Mill Co. Ltd. v. CIT [1980] 125 ITR 33, the Allahabad High Court, relying, inter alia, upon the judgment of the Supreme Court earlier quoted, drew a distinction between a statutory liability and a liability based upon a contractual obligation. In the case of a statutory liability, the quantification or ascertainment could not postpone the accrual thereof; but if the liability was based on a contractual obligation, it arose only when it was ascertained. In the case before the Allahabad High Court, the assessee company followed the mercantile system of accounting. In its assessment for the assessment year 1960-61, it claimed deduction of a certain sum paid to a research association towards its annual contribution for the year ended March 31, 1958. There had been some dispute between the assessee and the research associat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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