TaxTMI 
TaxTMI 
2008 (5) TMI 631
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....we frame the following question of law : "Whether the Income-tax Appellate Tribunal was correct in law in disallowing sales incentive claimed by the assessee under the incentive scheme which had expired on 30-4-1981 but which continued till 30-6-1981 as having no relevance for the assessment year 1983-84 ?" 2. The question arises in the following circumstances : The assessee maintains its accounts on a mercantile basis. It had floated a scheme, which was valid until 30-4-1981 and in terms of which the assessee was liable to pay to its dealers in cash an incentive for the sales made. The scheme was initially up to 30-4-1981 but it appears to have been continued up to 30-6-1....
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....allization of the liability on a future date would necessarily relate back to the earlier period but the entitlement to a deduction would have reference to the date on which the liability gets crystallized. The second situation, which has been canvassed by learned counsel for the revenue, is where the liability is actually crystallized on an earlier date but it may be quantified on a future date. 8. In our opinion, the case of the assessee falls in the first category and not in the second category. 9. In Saurashtra Cement & Chemical Industries Ltd.'s case (supra), the Gujarat High Court noted as follows : ". . . Merely because an expense rela....
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....5 ITR 428 1 relates to a completely opposite situation. In that case the Supreme Court observed as follows : "The law is settled : if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at....
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....the sense that the assessee would not have known till 30-6-1981 how much incentive the dealers had earned. On the other hand, insofar as the dealers are concerned, their entitlement would be known only when the sales were actually ascertained and determined and that was possible only on 30-6-1981 and not on a date prior to that. 15. Learned counsel for the revenue sought to place reliance on Addl. CIT v. Rattan Chand Kapoor [1984] 149 ITR 12 particularly on the follow passage : "We are of the view that a liability which is settled before the assessment is over can be appropriated to the relevant year in accordance with the Supreme Court's judg....
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....ere the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the department would not fritter away its energies in fighting matters ....