Law: Income Tax Act, 1922

Section: 66(1),10(2)(vi)

Income-tax Act, 1922 -Section 10(2)(xvi) -- Business expenditure -Mercantile system of accounting -Sugar factory -Provided with railway siding by Railway Authorities -Maintenance charges payable annually by factory at fixed percentage of total outlay -Liability ascertainable in account year but neither entered in books of account nor claimed in relevant assessment year -Liability cleared off in subsequent assessment year -Whether allowable deduction in subsequent assessment year -Held no -- Accounts -Mercantile system of accounting -Liability ascertainable in accounting year -Whether should be entered in books of account of the relevant year -Held yes JUDGMENT {The judgment of the court was delivered by ANWARUL HAQ J.}. -The Income-tax Appellate Tribunal (hereinafter referred to the Tribunal) has referred the following two questions of law under Section 66(1) of the Income-tax Act:-- Assessment years 1951-52 and 1952-53. (1) Whether, in the facts and circumstances of the case, the Tribunal was right in disallowing the claim of depreciation made under Section 10(2)(vi) of the Act in respect of roads, paths and culverts existing within the factory premises? Assessment years 1957-58 and 1958-59. (2) Whether, in the facts and circumstances of the case, the Tribunal was justified in confirming the disallowance of Rs. 28,566 in respect of the assessment year 1957-58 and Rs. 67,321 in respect of the assessment year 1958-59 on account of maintenance charges of railway sidings which amounts admittedly related to earlier account year? 2. It was stated at the Bar by the learned counsel for the petitioner that he did not wish to press the first question as relief had been granted by the departmental authorities. The relevant facts giving rise to the second question, as appearing in the statement of the case made by the Tribunal, are that the assessee, i.e, The Premier Sugar Mills & Distillery Co. Ltd., Mardan, which manufactures and sells sugar, had a railway siding provided for its factory at Mardan under an agreement entered into with the North Western Railway on the 20th of October 1950. Under clause 8 of the agreement the maintenance charges for this siding were to…

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