https://www.taxtmi.com/caselaws?id=189905 Under the mercantile system, a disputed liability is deductible only when it has accrued and become ascertained, or is finally fixed by settlement or adjudication. A mere claim made by a buyer, when liability is denied in good faith and remains under challenge, does not require immediate recognition as a loss. Here, the assessee contested the claim through arbitration and court proceedings, and the liability was crystallised only by settlement in 1949, with payment completed in the relevant accounting year. The business loss was therefore admissible in the assessment year 1950-51, and not in the earlier year when the claim was first asserted. en-us Wed, 10 Jan 1962 00:00:00 +0530 Wed, 25 Jan 2017 14:50:01 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=189905 Under the mercantile system, a disputed liability is deductible only when it has accrued and become ascertained, or is finally fixed by settlement or adjudication. A mere claim made by a buyer, when liability is denied in good faith and remains under challenge, does not require immediate recognition as a loss. Here, the assessee contested the claim through arbitration and court proceedings, and the liability was crystallised only by settlement in 1949, with payment completed in the relevant accounting year. The business loss was therefore admissible in the assessment year 1950-51, and not in the earlier year when the claim was first asserted. Case-Laws Income Tax Wed, 10 Jan 1962 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=189905