1984 (11) TMI 5 - HC - Income Tax

Court Upholds Assessee's Deductions and Liabilities, Rules in Favor on Six Questions of Law

The judgment addressed various deductions and liabilities claimed by the assessee for different assessment years. The court upheld the Tribunal's ... Business Expenditure Issues involved: The judgment addresses six questions of law referred by the Income-tax Appellate Tribunal under section 256(1) of the Income-tax Act. These questions pertain to various deductions and liabilities claimed by the assessee for different assessment years.Question 1: The Tribunal's decision on allowing deduction for interest on purchase tax arrears for assessment years 1972-73 and 1973-74 was upheld in favor of the assessee based on precedents.Question 2: Regarding the understatement of sales turnover for the assessment year 1973-74, the Tribunal's decision favoring the assessee was supported by legal precedents.Question 3: The Tribunal's ruling on the addition of under-valuation of closing stock not being necessary was upheld in favor of the assessee based on legal considerations.Question 4 and 5: The Tribunal's decision on allowing deduction for liability accrued during the relevant previous year and on extra cane price being allowable based on accrual of liability was supported. The judgment emphasized that the correct quantification of liability determined after the close of the accounting year accrued as a liability relating to the assessment year under consideration.Question 6: The Tribunal's decision that certain expenditure does not amount to entertainment expenditure and is allowable as a deduction was upheld in favor of the assessee based on legal precedents.The judgment concludes by answering all questions in favor of the assessee and against the Revenue, directing the Revenue to pay the costs of the assessee along with the advocate's fee.