TaxTMI 
TaxTMI 
1988 (7) TMI 102
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.... grounds relate to part disallowance of telephone expenses for the telephone installed at the residence of the assessee and part disallowance of car expenses along with depreciation. On these grounds, we have heard the parties and proceed to dispose of the same. 2. Insofar as the addition of Rs. 1,59,108 on account of sales tax is concerned, it was made by the Income-tax Officer on the ground that the assessee had taken the sales tax collection of the last quarter of the previous year directly to balance sheet. In this regard the Income-tax Officer found that the assessee who is an individual had to account for the income occurring and arising from business carried on in two names, viz., M/s Vinod Metal Industries and M/s J. K. Aluminium....
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....um of Rs. 1,00,261 relating to the business carried on in the name of J. K. Aluminium. 4. The Income-tax Officer had disallowed approximately 1/4th of telephone expenses for the telephone installed at the residence of the assessee while computing income from the business under the name of J. K. Aluminium. The Income-tax Officer also while computing income from Vinod Industries disallowed 1/4th car expenses and 1/3rd depreciation for personal user of the car. The learned Commissioner while dealing with these issues brought before him by the assessee reduced the disallowance of telephone expenses from Rs. 7,500 to Rs. 5,530. He, however, confirmed the disallowance of motor-car expenses for personal user to the extent of Rs. 7,656 which was....
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....s of the assessee for the business carried on under the names of J. K. Aluminium and Vinod Industries on account of sales tax. In view of the ratio decidendi of the judgment of the Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542, the disputed amounts formed parts of his trading or business receipts, that the fact assessee credited the said amounts received as sales tax under a specified head did not make any material difference because it is true nature and quality of the receipt and not the head under which it is entered in a the account books that would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent ....
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.... and loss account to examine what incidence of tax resulted therefrom. In view of what is observed by us supra these amounts should enter into the trading and profit and loss account of the assessee. When these amounts enter into the trading and profit and loss account of the assessee the income of the assessee will be accordingly enhanced. Therefore, an issue linked with the inclusion of these amounts in the turnover does crop up. This issue is whether the assessee should get deduction of these amounts because these are statutory liabilities embedded in the very sales and the assessee is obliged to pay the same. On this issue the assessee claims that the deduction should be allowed because the time for making the payment of the collections....
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....mployed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him Section 43B is a special provision. A simple reading of this section shows that it is an exception craved out by the Legislature by its Legislature wisdom to see that deductions in respect of certain tax or duty is allowed only in the years in which the payment is made. The Legislature has taken care to spell out that even if liability today had been incurred by the assessee or had occurred, the payment would not be admissible. Thus, it is very clear that the case of the assessee is without any force on a plain reading of this section. It is not in dispute that this section was in operation for the assessmen....
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....ness of the assessee. The Tribunal further held that there was no need to disturb that method regularly followed by the assessee especially when it reflected the true profits of the business. We find that this judgment is on an issue which is different from the one before us. Even the ratio of this judgment cannot apply to the facts of the case before us because of the change in law by the insertion of section 43B into the Income-tax Act, 1961 with effect from1-4-1984. Moreover, the Tribunal was very clear to point out that the method should reflect true profits of the business. In our considered opinion the method that the assessee is adopting cannot reflect the true profits of the business because part of the trading receipts are not refl....