Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1973-74 - Assessee, a sugar mill, was allowed to collect higher price of sugar but subject to condition in pursuance of order of High Court that it should deposit difference between price fixed by Government and price claimed by assessee, in a suspense account - Assessee, accordingly, kept amount in suspense account with bank for assessment year in question - Whether extra amount realised on enhanced price of sugar had not accrued to assessee in assessment year in question and, as such, did not form part of its income for that year - Held, yes FACTS The assessee company was engaged in the manufacture and sale of sugar. For the assessment year in question it had kept an amount in a suspense account in the name of the District Magistrate in a bank in pursuance of the order of the High Court in a writ petition which was filed by the assessee questioning the levy price fixed by the Government. As the assessee wanted higher price, it was allowed to collect the higher price but subject to the condition that he should deposit the difference between the price fixed by the Government and the price claimed by the assessee in a suspense account. The Tribunal held that the amount realised by the assessee did not accrue in assessment year in question and, as such did not form part of its income for that year. On reference: HELD Following the decision of the Allahabad High Court in Dhampur Sugar Mills Ltd. v. CIT [1991] 188 ITR 787, it was to be held that the Tribunal was correct in holding that the extra amount realised on enhanced price of sugar had not accrued in the assessment year in question and, as such, did not form part of the income of the assessee for that year. Note: The decision is in favour of the assessee. CASE REFERRED TO Dhampur Sugar Mills Ltd. v. CIT [1991] 188 ITR 787 (All.). JUDGMENT B.P. Jeevan Reddy, CJ.- Under…

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