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TMI Blog1984 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals) has erred in holding that sum of Rs. 5,79,777 being the amount of subsidy for which bills had been submitted by the assessee to the Government had become due to the assessee in the previous year relevant to the assessment year under consideration. The facts in short are that during the previous year which ended on 30-6-1973, there was famine in the State of Gujarat. Due to this famine, the Government of Gujarat decided to run Wadas through which fodder, etc., was to be provided to the cattles by the Government itself or by some other agencies. In case the Wada was run by other agencies, the Government was to give subsidy to that agency and the revenue department of the Government has passed a resolution on 20-10-1972 sanctionin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g payment of such subsidy is pending before the High Court of Gujarat. Before the ITO, the assessee claimed that in view of these facts the amount of Rs, 5,69,777 is not income accrued to the assessee in the year under consideration, The ITO did not agree with the claim of the assessee. According to him, once the assessee has run the Wadas under the scheme and sent the bill to the Government, the income is accrued and the assessee is liable to pay tax thereon in the year under consideration. 3. In appeal, the Commissioner (Appeals) has followed the decision of the Madras High Court in the case of Thiagaraja Chettiar Co. v. CIT [1964] 51 ITR 393 and confirmed the view taken by the ITO. Being aggrieved, the assessee came in appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142, Rajan Ramkrishna v. CWT [1981] 127 ITR 1 (Guj.), CIT v. South Arcot District Co-operative Supply Marketing Society Ltd. [1981] 127 ITR 467 (Mad.), Morvi Industries Ltd. v. CIT [1971] 82 ITR 835 (SC,) and Cooper Engg. Ltd. v. CIT [1982] 135 ITR 597 (Bom.). 5. We have heard the rival submissions and considered the material on record. The Government have passed a resolution on 20-10-1972 wherein it was decided that on account of drought and famine there was scarcity of fodder for the cattles and, therefore, in order to save cattle wealth in the affected areas the Government has started various schemes. Under that scheme if some agency other than the Government provides fodder to the cattles, the Government will pay 75 paise per day p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment, has allowed subsidy or grant on the sale of soda ash sold at a reasonable price. The sales were in the year 1951-52. Subsidy was finally sanctioned and paid in 1954. The issue was as to when, the subsidy should be assessed as income. Their Lordships have observed as under : " The short question that we have to consider on the facts of this case is when the right to receive the sum of Rs. 2,03,903 accrued or arose to the assessee for the first time. Did it accrue at the time when the sale was effected in the relevant accounting period or it accrued at the time when the Government was satisfied as regards the appropriate rate at which soda ash was sold and agreed to pay the amount of subsidy ? Even though the Tribunal in its order h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that commission was accrued only when the bill for commission was accepted by the principal. Therefore, the commission income was accrued to the firm and not to the assessee. Therefore, their Lordships relied on the decision in the case of E.D. Sassoon Co. Ltd. By this decision, the learned counsel for the assessee tried to point out that the mere sending of bill is not enough for accrual of income. Income is accrued only when the other party has accepted the claim. So far as the claim of the learned departmental representative is concerned, his main reliance was on the decision of the Gujarat High Court in the case of Spunpipe Construction Co. (Baroda) (P.) Ltd. The facts in short are that the assessee had supplied certain items to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental representative are Rajan Ramkrishna's case, South Arcot District Co-operative Supply Marketing Society Ltd.'s case, Morvi Industries Ltd.'s case and Cooper Engg. Ltd.'s case. In all these cases, the facts are different and mostly related to the trading receipts but in the case under consideration the facts are more similar to the facts of the case considered by their Lordships of the Bombay High Court in Dhrangadhra Chemical Works Ltd.'s case. Therefore, following the view taken by their Lordships of the Bombay High Court and reasons given therein, we are of the view that till the final decision on the dispute regarding subsidy, it cannot be said that income has accrued to the assessee in the year under consideration. Income cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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