9911796707
TMI Blog1982 (9) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... This very question has been referred to in I.T.R. No. 432 of 1976, which relates to the assessment year 1972-73. In I.T.R. No. 834 of 1977 arising out of the assessment year 1972-73, apart from the aforesaid question, which is referred to as question No. (i), two other questions have been referred for the opinion of this court. They are: (ii) Whether, on the facts and in the circumstances of the case, the method of accounting employed by the assessee is such that the income for the assessment year 1971-72 could be properly deduced therefrom without adding to the assessee's total income a sum of Rs. 1,44,471, being the difference on account of excess of closing balance of bills receivable over the opening of the same ? (iii) Whether, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd decide whether and how far his examination justified the assessee's claim that it should be, assessed in respect of receipts by way of sale on cash bills. In the appeal, the AAC observed that while the figures of bills receivable had been indicated in the assessee's balance-sheet, there were no figures of bills payable shown as outstanding on the liabilities side. The assessee had made a provision for Rs. 43,607 on account of gratuity to workers under the provisions of the Working Journalists (Conditions of Service and Miscellaneous Provisions) Act, 1955, and had claimed deduction for this amount for the year 1958-59. The AAC, therefore, concluded that this fact clearly showed that the appellant's contention that it consistently followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no accrued liability on account of salaries and wages payable for the last month of the assessee's accounting year. In the appeal before the Tribunal, it observed as follows: " The finding of the Appellate Assistant Commissioner that bills receivable or sundry debtor., were shown on the assets side of the balancesheet is not correct. It is significant that neither in paragraph 10 nor paragraph 13 of the AAC's order he has mentioned a sense item of bills receivable or sundry debtors and, as already pointed out, the departmental representative has admitted before us that no item of bills receivable or sundry debtors are to be found in any of the balance-sheets relevant for 1958-59 to 1970-71 assessment years filed before the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -59 to 1970-71. The Tribunal was, therefore, justified in reversing the decision of the AAC that in these matters the mercantile system of accounting was being observed by the assessee. With regard to the expenses on electricity and other bills also, the same position existed. As regards the payment of salaries and wages to the employees of the assessee-company, the account books disclosed that these were not provided for in the books of account and profit and loss account in the last month of each of the accounting years. Payments were made and recorded in the first month of the succeeding accounting year. That also clearly indicated that the assessee-company followed the cash system of accounting. The finding recorded by the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice put in by the different employees and the payment of bonus had been according to the length of service put in by the employees and had varied in the case of the employees of different standing. It was also held that the conditions contained in s. 36(1)(ii) of the Act as well stood satisfied. The payment was by way of special bonus and its reasonableness with reference to the condition of service could not have been gone into. Its reasonableness with reference to the length of service was certainly a relevant factor. The profits of the business justified the payment and, lastly, no evidence of general practice could have been given because the celebration of golden jubilee is not a normal event. It was ultimately held that the disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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