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TMI Blog1986 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ount representing the additional demand covered by the assessment orders received by the assessee during the previous year under appeal. The assessee debited the aforesaid sum of Rs. 18,08,816 to the profit and loss account of the year under consideration. The assessee filed an explanatory note before the ITO explaining that it did not accept the sale tax assessment relating to the asst. yrs. 1970 to 1978. Appeals and Stay Petitions were pending before the sales tax authorities. The ITO held that the Sales tax liability did not arise during the calendar year 1979 which is under consideration. Since the assessee was following mercantile system of accounting, the ITO disallowed the claim of the assessee as not relating to the previous year under consideration. 4. The assessee appealed to the CIT(A) and contended that the claim of the assessee should have been allowed. The CIT(A) rejected the claim of the assessee relying on the decision in the case of Kedarnath Jute Mft. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC) and CIT vs. V. Krishnan (1979) 12 CTR (Mad) 371 : (1980) 121 ITR 859 (Mad). 5. Shri S. Dasgupta, urged before us that the assessee's alternative claim to allow a portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in the accounting year 1957-58. The assessee made a debit entry in its account in that year and claimed it as business expenditure. The Gauhati High Court held that the claim of the assessee was allowable on the ground that there is no legal bar for doing so. (4) CIT vs. Central Province Manganese Ore Co. Ltd. (1978) 112 ITR 734 (Bom). In this case, the assessee made a claim to deduct an amount demanded from the assessee as additional export duty for an earlier year. The Revenue authorities disallowed the claim on the ground that he additional demand was not accepted by the assessee nor was paid by it. The Tribunal allowed the claim of the assessee relying on Kedarnath Jute Mfg. Co. Ltd. The Bombay High Court confirmed the decision of the Tribunal. (5) ITAT vs. B. Hill Co. (P) Ltd. (1981) 29 CTR (All) 301 : (1983) 142 ITR 185 (All). In this case, the assessee received a show-cause notice as to why it should not be held to be liable for sales tax for its activities which it made in the earlier years. The assessee made a provision for the liability attributable to the show-cause notice and made a claim for deducting the same while computing its business income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying to reduce or waive the liability. Hence, he urged that the said decision is of no help to the assessee. Next, he referred to the decision of the Patna High Court in the case of CIT vs. Sheo Kumar Debi (1986) 50 CTR (Pat) 350 : (1986) 157 ITR 13 (Pat) for the proposition that a judgment has to be read as a whole in order to find out its true ratio. The reading of a sentence here and another sentence there from a judgment will not necessarily lead to the true ratio of the judgment. Neither every observations found in a judgment nor what logically follows from the various observations made in it constitutes the ratio of a judgment. Hence, he urged that the reference made by Shri S. Dasgupta in disconnected sentences from this judgment and that does not help the case of the assessee as in every case the true ratio, is important. Next he referred to the decision in the case of CIT vs. Brijmohan Das Laxman Dass (1979) 11 CTR (All) 243 : (1979) 117 ITR 121 (All), in this case, the Allahabad High Court held that the sales tax liability of one year cannot be claimed as a deduction in a subsequent year on the ground that the sales tax assessment was completed in the subsequent year. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is not correct to say that the said case is an authority for the proposition that the liability to sales tax can be deferred to an year subsequent to the year of sale merely on the ground that the demand for the sales tax or the additional tax over the amount unprovided by the assessee was raised in a subsequent year. We have gone through the decision of the Calcutta High Court in the case of Royal Boot House, but we find that this decision was given prior to the decision of the Supreme Court in the case of Kedarnath Jute Mfg. It is true that some of the High Courts, as stated above, appear to support the case of the assessee. However, on closer examination, we find that each of those cases was decided in favour of the assessee in the peculiar facts and circumstances of those cases which are clearly distinguishable from the facts of the case before us. In this case, the assessee effected the sales in the earlier years and made provisions for sales tax on those sales, but on a lower figure. Later, the sales tax authorities raised the demand for the correct amount under the law. On the authority of Kedarnath Jute Mfg., it can be said that this extra demand related back to the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnon, he disallowed those two amounts. 9. The assessee has come up in appeal before us against the two amounts disallowed while the Department has come up in appeal against the sum of Rs. 2,57,304 allowed the CIT(A). 10. Shri S. Dasgupta, urged before us that the claim of the assessee should have been allowed. he relied in this connection on the decision in the case of CIT vs. Rajeshwari Distributors (P) Ltd. (1980) 16 CTR (Cal) 394 : (1980) 125 ITR 618 (Cal). This was a case of sales tax by a subsequent Notification, the assessee was made liable to pay sales tax for the transactions made in the earlier year. The assessee's claim for deducting the sales tax on the basis of the Notification was allowed by the Calcutta High Court as an admissible deduction. 11. He also referred to the decision in the case of CIT vs. Century Enka Ltd. (1981) 130 ITR 267 (Cal). In this case provision for excise duty was allowed as a deduction, though no demand notice for duty was issued. 12. Shri. S. K. Jha, on the other hand, supported the disallowance on the ground recorded by the Revenue authorities. Further, he urged that the assessee had obtained a Stay from the High Court in its Const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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