Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Year in which deductible - Assessment year 1977-78 - Assessee-company terminated services of certain officers during previous year relevant to assessment year 1977-78 - Assessee claimed accrued liability of Rs. 30,57,740 in respect of special pension in assessment year 1977-78 - ITO disallowed claim on ground that liability would have to be considered in year in which retirement took place - Tribunal allowed assessee's claim holding that claim for deduction on basis of accrual of liability could not be rejected merely on ground that assessee did not pay liability or deferred its payment during year under reference - Whether Tribunal was justified in holding so - Held, yes Section 216, read with section 212, of the Income-tax Act, 1961 - Advance tax - Interest payable by assessee in case of underestimate - Assessment year 1977-78 - Whether ITO was justified in levying interest under section 216 without recording any finding as to whether assessee had underestimated its income while filing estimate under section 212 - Held, no CASES REFERRED TO CIT v. Mahindra Sintered Products Ltd. [2001] 252 ITR 576/[2002] 121 Taxman 458 (Bom.) [Para 2], Mahindra & Mahindra Ltd. v.CIT [2003] 261 ITR 501/ 128 Taxman 394 (Bom.) [Para 2], CIT v. Sirpur Paper Mills [1999] 237 ITR 41/ 103 Taxman 352 (SC) [Para 2], CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992] 196 ITR 149 / 62 Taxman 471 (SC) [Para 5], Addl. CIT v. Vazir Sultan Tobacco Co. Ltd. [1980] 122 ITR 251 (AP) [Para 7], Oudh Sugar Mills Ltd. v. CIT [1994] 210 ITR 692 / 74 Taxman 626(Bom.) [Para 7], CIT v. Rayalaseema Mills Ltd. [1997] 228 ITR 477 (AP) (FB) (Para 7), CIT v. National Insurance Co. of India [1981]127 ITR 54 /5 Taxman 283 (Cal.) [Para 12], CIT v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 /[1981] 5 Taxman 164 (Cal.) [Para 16], Indian Molasses Co. Ltd. v. CIT [1959] 37 ITR 66 (SC) [Para 16], Standard Mills Co. Ltd. v. CWT [1967] 63 ITR 470 (SC) [Para 16] and CIT v. Bombay Dyeing & Mfg. Co. Ltd. [1996] 219 ITR 521 / 85 Taxman 396 (SC) [Para 17]. Ashok Katangale for the Applicant. S.E. Dastur and B.V. Jhaveri for the Respondent.…

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