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TMI Blog1979 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... o auditors and others amounting to Rs. 7,250 and claimed as a permissible deduction from assessee's income? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amount of Rs. 81,108 claimed by the assessee-firm as deduction from its income was neither admissible under section 10(1) nor under section 10(2)(xi) nor under section 10(2)(xv) of the Income-tax Act. 1922 ? " The material facts, as set out in the statement of the case, giving rise to this reference briefly are as follows : The assessee is a partnership firm and the assessment year in question is 1956-57. In the return filed by the assessee, a claim for deduction of a sum of Rs. 7,250, on account of legal expenses and fees p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have come to an end with effect from 1st January, 1956. The assessee-firm also resigned with effect from 31st March, 1956, its sole selling agency by letter dated 22nd March, 1956, addressed to the company. On the same date, i.e., 22nd March, 1956, an agreement was drawn up between the partners of the firm terminating the partnership agreement dated 16th January, 1950, except to the extent of continuing their guarantee given to the State Bank of India in the name of the assessee-firm for the cash credit account of Rs. 50 lakhs advanced by them to the Hukumchand Mills Ltd. Thus, the partnership was terminated with effect from 22nd March, 1956, except to the limited extent of continuance of guarantee as indicated above. However, the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written off. With regard to the amount of Rs.60,516, the Tribunal, after considering the terms of the sole selling agency agreement, came to the conclusion that no liability had accrued in the accounting year under consideration. In this view of the matter, the Tribunal found that the claim of the assessee could not be entertained under s. 10(1) of the Act. The Tribunal further held that the deduction could not also be claimed under s. 10(2)(xi) or s. 10(2)(xv) of the Act. That is how the second question of law, referred to this court for its opinion, arises out of the order of the Tribunal. As regards the first question, learned counsel for the assessee contended that the Tribunal erred in holding that it had no jurisdiction to allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssly or impliedly decided. We must emphasize again that by implied decision, we mean that though a point might have been raised before the Appellate Assistant Commissioner, in his final order the Appellate Assistant Commissioner might not have dealt with that point and thereby impliedly rejected it. That is an implied decision of the Appellate Assistant Commissioner and a party may be aggrieved by an express decision of the Appellate Assistant Commissioner or by an implied decision of the Appellate Assistant Commissioner. The subject-matter of the appeal before the Tribunal can only be the decision express or implied of the Appellate Assistant Commissioner and the jurisdiction of the Tribunal is restricted to the subject-matter of the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the claim of the assessee for deduction of legal expenses was not the subject-matter of appeal before the Tribunal as that was not the matter expressly or impliedly decided by the AAC. The Tribunal was, therefore, right in holding that it had no jurisdiction to allow the assessee to raise the ground in respect of the claim for deduction of legal expenses. Our answer to the first question referred to us is in the negative and against the assessee. As regards the second question, learned counsel for the assessee confined his argument to the question as to whether the Tribunal was right in holding that the deduction claimed by the assessee was not admissible under s. 10(1) of the Act. Learned counsel for the assessee contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not till then paid for the goods sold to them, informed the assessee as follows : " As per the terms of selling agency agreement with you, you are responsible for the amounts due from the parties mentioned above. As desired by you we have taken legal action against the parties as stated above. In the meantime we would be debiting the amount to your account and in case any amount is recovered from the debtors we shall give you the credit in respect of such recoveries." The aforesaid letter does not throw any light on the question as to when the liability was incurred by the assessee. The liability of the assessee accrued, in terms of the selling agency agreement, when the amount became due from the parties to whom goods were sold. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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