Law: Income Tax Act, 1961

Section: 256(1)

Income-tax--- ----Income---Accrual of income---Accounting---Mercantile system of accounting- --Asses see running cold storage---Cold storage charges fixed by State Government ---Assessee increasing its charges because it had to install a generator---Writ petition filed to restrain State Government from enforcing its rates---High Court passing interim order directing deposit of excess collections in Cooperative Bank---Excess amounts had accrued to assessee--­Subsequent High Court decision allowing increase in charges---Excess amount assessable---Indian Income Tax Act, 1961. The assessee owned a cold storage. It maintained its accounts on the mercantile system. A tariff which a cold storage owner can charge from the growers for keeping food items in his cold storage is fixed by the Government. The Government had fixed the tariff at Rs.10 per bag of 85 Kg. of potatoes. Following an acute shortage of power in the State of Punjab, cold storage owners decided upon installing their own generators. The assessee also installed his own generator. Like other cold storage owners, he raised the tariff charges from Rs.10 per bag of potatoes to Rs.15 per bag of potatoes. The Government by notification, dated May 12, 1976, permitted the cold storage owners to charge Rs.11.70 per bag from those who had already entered into transaction& with them while for new transactions they fixed Rs.10 per bag only. The cold storage owners approached the High Court for issuance of a writ for restraining the Government from enforcing the rates published in the notification, dated May 12, 1976. The High Court admitted the writ petition and permitted them to collect storage charges at Rs.13 per bag. The difference between the rates fixed by the Government vide notificationâ-ž, dated May 12, 1976, and the rates permitted by the High Court came to Rs.1.30 per bag. The High Court, as an interim measure, directed that the sum of Rs.1.30 per bag, representing the excess over the Government fate should be deposited in a Cooperative Bank at Kapurthala and pledged in the name of the Deputy Commissioner, Kapurthala, during the pendency of the writ petition. The excess amount realised by the assessee…

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