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TMI Blog2009 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming benefit of finance commission in the year of hire purchase agreement itself irrespective of the fact that the amount of instalments as per the hire-purchase agreement was actually paid in the subsequent years - the same system is required to be continued for the assessment years and this arrangement is allowed looking to the peculiar facts and circumstances of the case as the firms have already closed their business and the amount so claimed is not quite higher - 43 of 1989 and 7 of 1990 - - - Dated:- 26-2-2009 - R. C. GANDHI ACTG. C. J. and M. N. BHANDARI J. R. B. Mathur for the Commissioner. P. K. Kasliwal and C. M. Sharma for the assessee. JUDGMENT 1. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion' which did not pertain to the accounting period relevant to the assessment year under reference ? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the disallowance of Rs. 94,465 out of the total llabillty of Rs. 1,20,380 claimed by the assessee as having accrued during the year on account of hire purchase commission ? 3. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding that the liability of Rs. 1,20,380 claimed by way of accrued hire purchase commission was in reality the amount of interest projected over the period of hire purchase agreements, and that, therefore, only the interest relatable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Learned counsel for the Revenue submits that it being hire-purchase agreement, title of the vehicle was not passed on to the assessee and thereby, the amount of finance commission, which was actually paid in the subsequent years cannot be claimed as the expenditure in the year when the hire-purchase agreement was entered, thus, the deduction towards finance commission cannot be taken entirely in the year of the hire-purchase agreement rather same has to spread in the years in which the aforesaid commission was actually paid by the assessee in instalments. 6. According to learned counsel for the assessee, they had entered into the hire-purchase agreement in many previous years and as per the mercantile accounting system, they had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, particularly in the context of chit discount. Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits, the Department can insist on substitution of the existing method. Further, in the present cases, we find from the various statements produced before us, that the entire exercise, arising out of change of method from the completed contract method to deferred revenue expenditure, is revenue neutral. Therefore, we do not wish to interfere with the impugned judgment of the High Court." 7. On the other hand, learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the aforesaid facts and circumstances, and also the judgment of the hon'ble apex court in t case of CIT v. Bilahari Investment P. Ltd. [2008] 299 ITR 1, we are of the view that the Department having permitted the assessee to claim the benefit of finance commission in the year in which hire-purchase agreement was entered, the same system is required to be continued for the assessment years 1980-81 and 1981-82, and this arrangement is allowed looking to the peculiar facts and circumstances of the case as the firms have already closed their business and the amount so claimed is not quite higher. It is also to be noticed that the hon'ble apex court in the case of CIT v. Bilahari Investment P. Ltd. [2008] 299 ITR 1 held that the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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