Accrued liability for sugar-cane additional price deductible when purchase fixes the obligation under the Control Order.

Additional price payable for sugar-cane under paragraph 3(3A) of the Sugar-cane Control Order was deductible in computing income for the relevant previous year because the liability arose automatically once sugar-cane was purchased and the minimum price under paragraph 3(1) was fixed. No separate order of the Cane Commissioner or other authority was a condition precedent. As the amount was ascertainable from the Schedule, the accrued liability was deductible on the mercantile system against profits in the year of accrual. The deduction was therefore allowable in favour of the assessee.

---

---

Issues: Whether the sum of Rs. 2,05,787 representing additional price payable for sugar-cane under paragraph 3(3A) of the Sugar-cane Control Order was deductible in computing the assessee's income for the previous year.

Analysis: The liability to pay the additional price arose by force of the Control Order itself once the sugar-cane was purchased and the minimum price stood fixed under paragraph 3(1). No order of the Cane Commissioner or any other authority was required as a condition precedent. The amount was capable of being computed from the Schedule and, on the mercantile system, an accrued and clearly ascertainable liability during the relevant previous year is deductible against profits.

Conclusion: The deduction was allowable and the question was answered in favour of the assessee.

---