Law: Income Tax Act, 1961

Section: 256(2)

Section 2(7)(c) of the Finance Act, 1973 - Industrial company - Assessment year 1982-83 - Commissioner, in exercise of power under section 263, directed Assessing Officer to modify assessment order by not applying concessional rate of tax to assessee, as it was not an industrial company - On appeal, Tribunal categorically found that Assessing Officer had granted investment allowance to assessee for assessment year under consideration in respect of plant and machinery engaged in same business which finding remained undisturbed - Therefore, Tribunal held that once assessee was granted investment allowance in respect of plant and machinery utilized in same business, it could not be said that assessee was not engaged in business of manufacturing activity or processing of goods while deciding status of assessee - Whether on peculiar facts of instant case, finding of fact recorded by Tribunal was to be upheld - Held, yes Section 28(i), read with section 145, of the Income-tax Act, 1961 - Business loss/deductions - Year in which deductible - Assessment year 1982-83 - Assessee was engaged in business of undertaking contracts of construction of buildings - During assessment proceeding relating to its first accounting year, assessee claimed deduction of provisions made for contingencies - Assessee was following percentage completion method as per which difference between receipt and expenses was reduced by an amount which was worked out as more than one-fourth but less than half of contract completed and balance was offered as profit - Commissioner, in exercise of power under section 263, held that amount so reduced should be taxed in assessment year under consideration - Tribunal upheld method of accounting followed by assessee as being in consonance with standard accounting practice and allowed its claim - Whether since amount reduced in year under consideration was offered for taxation in immediately succeeding year and by time when contract was completed, total receipts had borne charge of tax and assessee had derived no advantage therefrom, it could not be held that said amount was a receipt which was required to be charged to tax in year under consideration - Held,…

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