Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of Enhanced liability on account of market fee relating to an earlier year was allowable in subsequent year when dispute as to its rate was decided by Supreme Court in subsequent year and that resulted in enhanced liability The market fee was enhanced by the State Government to 3 per cent vide Ordinance No. 2 of 1978. That ordinance was challenged before the Supreme Court in Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008. The Supreme Court vide interim order dated 25th Sept., 1978, stayed the levy beyond 1.5 per cent. Thus, in the previous financial year, i.e., 1978-79, the assessee paid market fee only @ 1.5 per cent. However, the Supreme Court vide order dated 31st July, 1979, finally disposed of the matter and upheld the levy of market fee @ 2 per cent instead of 3 per cent. Thus, the liability to pay the balance market fee @ 0.5 per cent pertaining to the financial year 1978-79 arose on 31st July, 1979. The amount of Rs. 35,129 was on account of this liability. The assessee claimed deduction of such liability in the assessment year 1980-81. Held that the liability to pay the amount of Rs. 35,129 arose, when the Supreme Court decided the matter on 31-7-1979. Prior to that date, there was no liability to pay market fee in excess of 1.5 per cent. Since the liability arose on 31st July, 1979, which date fell within the accounting year 1979-80 relevant to the assessment year under consideration, i.e., 1980-81, the Tribunal was justified in allowing the deduction of that amount on the basis of mercantile system of accounting. JUDGMENT N.K. Sud, J.-In pursuance of the directions of this court, the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short "the Tribunal") has referred the following question of law arising out of its order dated May 31, 1985, relating to the assessment year 1980-81 for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, Amritsar is right in holding that an expenditure of Rs. 35,129 on account of market fee pertaining to earlier year is an allowable deduction when it…

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