1974 (4) TMI 14

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..... the liability had not accrued and that the assessee, though he was maintaining accounts on the mercantile system, had not made entries in its profit and loss account showing this liability. This view was upheld in appeal. The Tribunal took the same view in second appeal. At the instance of the assessee the following question of law has been referred for the opinion of this court : " Whether, on the facts and in the circumstances of the case and on a true and proper interpretation of the Sugarcane Control Order, 1955, and orders made thereunder, the liability for additional sugarcane price under the price-linking formula was incurred by the assessee-company in the relevant previous year ? " During the pendency of the appeal before the Ap .....

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..... ane an amount in addition to the price fixed under paragraph 3(1) of the Control Order. It is a liability which arises as soon as the sugarcane has been purchased and the minimum price fixed in respect of such purchase under the Control Order. The liability does not depend upon any other circumstance for its accrual. No order of the Cane Commissioner or other authority is necessary. As soon as the purchase is effected and the minimum price is fixed no further condition needs to be satisfied before the liability arises." In Kundan Sugar Mills v. Commissioner of Income-tax [1977] 106 ITR 704 (All), another Division Bench held that the liability created under clause (3A) is an accrued liability and was not a contingent liability. These are .....

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..... will not be defeated or fail by reason of the assessee not making the relevant entries in his books of account. A Division Bench decision of this court in Commissioner of Income-tax v. Poonam Chand Trilok Chand [1976] 105 ITR 618 (All) is also material and in point. There the assessee who was a dealer under the U.P. Sales Tax Act collected from its customers an aggregate sum of Rs. 43,165 on account of purchase tax leviable on the sale of rab. This amount was carried in the account books in a reserve account called " reserve for purchase tax " instead of being debited to the profit and loss account. The assessee did so because it was disputing its liability to pay the purchase tax on the ground that it was not a first purchaser of rab and .....

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