Law: Income Tax Act, 1922

Section: 13

Income-tax Act (XI of 1922)---S. 13, proviso-Method of accounting-Computation of income-­Rejection of accounts-- Managing agents of assessee-Company entering into contract with object to enrich themselves-Additional income from such contract not received by assessee-Rejection of accounts of assessee and addition of income from contracts-Held, not justified-Proviso to S. 13 does not apply to such case. JUDGMENT KANTAWALA, C. J. -In this case, at the instance of the revenue, two questions are referred for our determination and they are as under: "(1) Whether the finding of the Tribunal that there is no basis for the addition of Rs. 76,92,566 is justified in law? (2) Whether, if the amount of Rs. 76,92,566 is at all considered to be the profit of the assessee-Company, a deduction should be allowed to the assessee-Company in respect of the that amount on the ground that in the circumstances of the case the amount represented a revenue trading loss arising to the assessee-Company in the course of its business?" The assessee-Company consist of a group of cotton textile mills containing five units some of which are composite and some of which are not composite. For the year of account 1948, relevant to the assessment year 1949-50, the assessee-Company submitted a return of income showing a net profit of Rs. 59,71,594 as per its books of: account. Messrs Agarwal & Co., a partnership firm, was the managing agent of the assessee-Company. The managing agency firm consisted of certain partners some of whom were individuals and the others were firms. The Management of the various mills as a group was divided amongst the individuals and firms for the sake of convenience. The distribu­tion of the various mills amongst the individuals and firms vas as follows: - Partners Share Mills allotted Khaitan group 6 as. No. 1 (whose) & Dye works with (6). Morarka group Bagla group 2 as. 2 as. Nos. 2 and 3. Podar group 2 as. No. 4 Seksaria group 2 as. No. 5 Nihalchand group 2 as. Dye works with (1). The selling agent of the assessee-Company was the firm of Bhagwatiprasad Jagdambaprasad, which consisted of seven partners Except for one partner by name S. N. Bagla no other partner…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492