Law:

Section:

Section 37(1) of the Income-tax Act, 1961 [Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922] - Business expenditure - Year in which deductible - Assessment year 1945-46 - Assessee company purchased coal and consumed same in year previous to relevant account year - Assessee, however, claimed under section 10(2)(xv) of 1922 Act deduction of coal price in relevant assessment year on ground that there was an agreement to effect that price of coal supplied would not be payable till invoices had been received by assessee and said invoices were received by assessee in relevant accounting year - ITO, however, disallowed claim on ground that assessee-company followed mercantile system of accounting and so expenditure relating to year prior to year in consideration could not be allowed in subsequent year, i.e., year under assessment - Tribunal upheld order of ITO - Whether in view of fact that under section 32 of the Indian Sale of Goods Act (III of 1930), delivery of goods and payment of price are concurrent conditions, if assessee wanted to prove that there was an agreement to contrary, it was for assessee to produce evidence in that regard - Held, yes - Whether since assessee failed to show that there was any contract to contrary, order passed by authorities below was correct, and, it was to be affirmed - Held, yes FACTS The assessee, a member of the association, was supplied coal in the months of June, July and August, 1943, and it had been consumed in the account year before 1-11-1943. The assessee, however, claimed under section 10(2)(xv) of 1922 Act a deduction of that amount as expenditure for the relevant year on the ground that there was an agreement with the pool association that the price of the coal supplied would not be payable till the invoices had been received by the assessee. The invoices were received by the assessee. The invoices were received after 31-10-1943, i.e., in the relevant account year. The ITO disallowed the claim on the ground that the company followed the mercantile system of account and so the expenditure relating to the year prior to the year in consideration could not be allowed in the subsequent year, i.e., the…

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