Law:

Section:

Section 28(i), read with section 263, of the Income-tax Act, 1961 - Business deduction/loss - Assessment year 1973-74 - Assessee, a manufacturer of gunny bags, maintained accounts on mercantile basis - During relevant previous year, Government served an order under rule 114(2) of Defence of India Rules, 1971 upon assessee to supply 7,110 bales of jute bags during period November 1971 to September 1972 - Supply was to be made at notified price, which was lower than market price - As against 7,110 bales ordered to be supplied, assessee manufactured 5,270 bales only during relevant previous year, out of which only 3,405 bales were supplied to Government and remaining 1,865 bales remained unsupplied on last day of accounting year - Assessee claimed a sum of Rs. 2,28,548 as business loss suffered by virtue of said order of Government - ITO allowed assessee's claim, but Commissioner, acting under section 263, opined that loss in question should be worked out on basis of supplies actually made with reference to cost of production and cost of supply - Whether entire loss of Rs. 2,28,548 was allowable in relevant previous year - Held, yes FACTS The assessee-company, a manufacturer of jute articles, specially gunny bags, maintained accounts on mercantile basis. During the relevant previous year, the Government served an order upon the assessee under rule 114(2) of the Defence of India Rules, 1971 to supply 7,110 bales of jute bags during the period November 1971 to September 1972. The supply was to be made at the notified price, which was lower than the market price. As against 7,110 bales ordered to be supplied, the assessee manufactured 5,270 bales only during the relevant previous year, out of which only 3,405 bales were supplied to the Government. The remaining 1,865 bales remained unsupplied on the last day of accounting year. The assessee claimed a sum of Rs. 2,28,548 as business loss suffered by it by virtue of the said order. The ITO allowed the assessee's claim. Subsequently, the Commissioner, acting under section 263, opined that the loss in question should be worked out on the basis of the supplies actually made with reference to the cost of production and the…

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