https://www.taxtmi.com/caselaws?id=39252 Under the mercantile system, purchase tax liability is deductible in the year it accrues, even if the amount is placed in a reserve account and the liability is disputed. The tax liability arose on the relevant transactions and had already been assessed under the U.P. Sales-tax Act, so actual payment was not required for deduction. The accounting entry adopted by the assessee did not determine the tax character of the expenditure. Any later remission or cessation of the liability would be dealt with under section 41 of the Income-tax Act, 1961. en-us Thu, 01 Nov 1973 00:00:00 +0530 Wed, 14 Apr 2010 10:57:18 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=39252 Under the mercantile system, purchase tax liability is deductible in the year it accrues, even if the amount is placed in a reserve account and the liability is disputed. The tax liability arose on the relevant transactions and had already been assessed under the U.P. Sales-tax Act, so actual payment was not required for deduction. The accounting entry adopted by the assessee did not determine the tax character of the expenditure. Any later remission or cessation of the liability would be dealt with under section 41 of the Income-tax Act, 1961. Case-Laws Income Tax Thu, 01 Nov 1973 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=39252