9911796707
TMI Blog1983 (1) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... .2,35,538 was allowable in the computation of income of the assessee for the asst. yr. 1977-78 which is under appeal. 2. There have been arguments from both the sides. The Facts which are relevant for the determination of the issue are as under : The assessee us a registered firm working under the name and style of M/s Aggarwal Rice and General Mills. The main business of the assessee consists in purchasing paddy, husking it and selling the produce. It is common ground that 90% of the rice produced has to be sold by the assessee to the Punjab Government under the Punjab Rice Procurement (Levy) Order at the specified rates. The above business was carried on by the assessee from the earlier years including the asst. Yr. 1974-75 on wards. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976. This petition was dismissed on the ground that no substantial question of law was involved. 4. Purchase tax was not to be collected from customers. The assessee was required to pay the tax when assessment for the accounting period 1974-75 relevant to the asst. yr. 1975-76 the assessee follows the financial year as the previous year for purchase of income tax was completed by the assessing authority (Shri D.R.Jain) on 21st May 1976 and demand notice was received on that date. Similarly, the demand notice for the accounting period 1975-76 relevant to the asst. yr. 1976-77 was received on 19th July 1977. The demand for the asst. yr. 1975-76 was Rs. 1,28,865 and for the asst. yr. 1976-77 it was Rs. 1,06,644, The total amount of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat none of the authorities propounded by the revenue was applicable to the facts of the case. On the otherhand the case of the assessee was supported by the following judgements. (i) CIT vs. R. Shantilal Co. (1971)82 ITR 214 (Cal); (ii) CIT vs. Nathmal Tolaram (1973) 88 ITR 234 (Gau); (iii) CIT vs. Banwari Lal Madon Mohan 1977 CTR (All) 21 : (1977) 110 ITR 868 (All); (iv) CIT vs. VS.Krishnan (1980) 121 ITR 859 (Mad); and (v) Comments of the ld. Authors Kanga and Palkhivala at Page 870, Seventh Edition. 7. We have given careful consideration to the rival submissions and after considering the relevant provisions of law with particular reference to the authorities cited, we are of the opinion that there is no substance in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee for the year in which the liability statutorily arose. In other words in case an assessee makes a provision of a liability which has statutorily arisen but the provision made and debited to the account maintained on mercantile system is short of the actually quantified demand the assessee cannot claim anything in excess of the provision in a subsequent assessment year when it is quantified but all revenues of claiming the proper amount in the earlier assessment year have gone beyond the reach of the assessee either due to the finality of the provision in a subsequent assessment year when it is quantified but all the revenues if claiming the proper amount in the earlier assessment year have gone beyond the reach of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Madras High Court in the case of Pope The King Match Factory where the Hon'ble Court had held that the assessee had incurred an enforceable legal liability on and from the date on which he received the Collector's demand for payment. The judgement of the Madras High Court in the case of Pope The King Match Factory was approved by the Supreme Court in the case of Kedar Nath Jute Mfg. Co. Ltd. with the observation that "in our judgement the above decision lays the law correctly". 9. The Madras High Court in the case of vs. Krishnan at p. 863 has pointed out that it may also happen that the disputed amount may have to be taken as a deduction in the year in which it is paid. On the other hand the Hon'ble Punjab and Haryana High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other view is that the liability can either be allowed in the year in which it statutorily arose and was debited by an assessee following mercantile system of accounting to its account by way of a provision or in the year in which the competent authority served upon the assessee statutory notice for payment of the demand. (c) The third view is that it can also be allowed in the year not when the notice was served upon the assessee but when actually it was paid. From the above it is clear that there are more than one reasonable views possible are more than one reasonable views possible on the issue of allowability of sales tax. It has been held by the Supreme Court in the case of CIT vs. Vegetable Products Ltd. 1973 CTR (SC) that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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