TaxTMI 
TaxTMI 
1976 (9) TMI 57
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....as the relevant previous year. During this year, the assessee collected cess from its principals in accordance with the directions of the Marketing Committee functioning under the Andhra Pradesh Agricultural (Produce and Livestocks) Markets Act, 1966, and the Rules framed thereunder. Such collections were credited to the Jaggery account. In the normal course, these collections would have been paid to the Marketing Committee during the year itself, However, the assessee, along with some other dealers disputed the right of this Marketing Committee to collect the cess by means of a Writ Petition in the High Court. This petition was pending as at the end of the accounting year under consideration. The assessee, therefore, debited the sum of Rs.....
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....rroneous in law. The Appellate Assistant Commissioner observed that the liability of the assessee to pay the cess collection to the Marketing Committee was not a contingent liability but it was a liability which has already accrued. Further, he held that the Writ Petition filed by the assessee would not affect that position in any way and so, the decision in Kedarnath Jute Mfg. Co. Ltd. vs. Commissioner of Income-tax (1) applied to the facts of the case. He further observed that the details regarding the principals from whom the collections were made were not relevant points for consideration. Since the liability has clearly accrued as at the end of the accounting year, it was neither vague nor contingent. Accordingly, he deleted the additi....
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....ommissioner of Income-tax(2) relied on by the Department did not apply to the facts of the case. He placed a copy of the order of the Hon'ble High Court of Andhra Pradesh in the case of M/s. Nagireddy & Co. (3). And urged that a similar claim was decided in that case in the same manner as the appellate consistant commissioner has decided in the instant case. The Hon'ble High Court have considered both the decisions of Kedarnath Fute Mfg. Co. Ltd. vs. Commissioner of Income-tax (1) and Chowringhee Sales Bureau P. Ltd. vs. Commissioner of Income-tax (2). It has been pointed out in that judgment:— We have heard the contentions of both the parties and have gone through the facts on record. We find that in the case of M/s. T. Nagireddy & Co....
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.... Representative produced before us the assessment orders for the years 71-72 and 72-73 dated 22nd October, 1970 and 20th October, 1972 respectively., the Income-tax Officer has clearly mentioned "Mercantile basis" against the query "Method of accounting". We, therefore, have no doubt that the system of accounting followed by the assessee was Mercantile system. 8. We further find that the amount collected as cess by the assessee was in accordance with the provisions of the Andhra Pradesh Agricultural (Produce and Livestock) Markets, Act, 1956. This Act lays down that business transaction conducted in a specific area would be liable to cess which would, in the first instance, be collected by the dealers like the assessee who must make over....