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- Section 66(1) - Indian Income-tax Act, 1922 - UP Sales Tax (Amendment) Act, 1957 CASES REFERRED TO Adarsh Bhandar v. Sales Tax Officer, Aligarh [1957] 8 STC 666 (FB), Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 ; [1960] 1 SCR 185, CIT v. Amrit Banaspati Co. Ltd. [1966] 59 ITR 388, CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 (SC), CIT v. Swadeshi Cotton & Flour Mills Private Ltd. [1964] 53 ITR 134 (SC), Firm Bengali Mal Satish Chandra Jain v. Sales Tax Officer, Agra [1958] 9 STC 492 (FB), J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh [1961] 12 STC 429 (SC),Keshav Mills Ltd. v. CIT [1953] 23 ITR 230 ; [1953] SCR 950, Norton v. Shelby Co. (118 U.S. 425), Pope the King Match Factory v. CIT [1963] 50 ITR 495 ,Ram Chand Textiles v. Sales Tax Officer, Hathras [1964] 15 STC 340 (FB), S.R.V.G. Press Co. v. Commissioner of Excess Profits Tax [1956] 30 ITR 583 ,Shephard v. Wheeling (30 W. Va. 479), Tika Ram & Sons (P.) Ltd. v. CIT [1964] 51 ITR 403 and Wallace Brothers & Co. Ltd. v. CIT [1948] 16 ITR 240 (PC). JUDGMENT Manchanda, J.-This is a case stated under section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is : "Whether the sum of Rs. 27,167 debited by the assessee to the profit and loss account and credited to the sales tax account is an admissible deduction ?" 2. The material facts are these: The relevant assessment year is 1956-57, the year ending on 28th August, 1957. The assessee is a dealer in cloth both purchased locally and imported from outside. Up-till the 31st March, 1956, sales tax was charged by the Government of Uttar Pradesh on sales of cloth imported from outside Uttar Pradesh at the rate of 3 pies to 6 pies per rupee. On the 31st March, 1956, the Government of Uttar Pradesh issued an ordinance raising sales tax to one anna per rupee. This ordinance was subsequently replaced by the U.P. Sales Tax (Amendment) Act, 1956, which purported to regularise the provisions of the said ordinance. Subsequent to this, the U.P. Sales Tax (Amendment) Act, 1957, was passed on 30th September, 1957, the main purpose of which was to hold that the amendment brought by the U.P. Ordinance of 31st…

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