2000 (11) TMI 126

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....ee's claim for deduction to the extent of Rs. 22,88,905 as representing a liability which was correctly claimed by the assessee as a deduction against the business profits for the assessment year 1975-76?" The factual position, as indicated in the statement of the case, is as follows: The assessee is a private limited company which, for the relevant assessment year, i.e., 1975-76, was carrying on the business in the manufacturing and sale of beedis. Originally, the business was carried on by a partnership firm by name Brijlal Manilal and Co. of which one Shri Chintamanrao was the managing partner. The company was incorporated in the year 1971. Shri Chintamanrao became the chairman and the agreed arrangement was that the company would ....

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....;     1973-74           13,53,148    Year ending Diwali 1973             1974-75           14,34,277    Year ending Diwali 1974             1975-76           10,69,393                                            &nbsp....

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....ication could be done and, therefore, the entire amount was allowable as expenditure in the year it was claimed. The Tribunal held that though normally the liability is to be reckoned in the year of accrual, in view of the peculiar circumstances, the liability was to be allowed as a deduction in the year under consideration. However, to work out the details, the Tribunal remanded the matter to the Income-tax Officer to examine the claims relating to Rs. 2,31,702 and Rs. 2,63,818 for the assessment years 1972-73 and 1973-74, respectively. On being moved for reference the question as set out above has been referred. Learned counsel for the Revenue submitted that in view of the settled position of law as laid down by the apex court in Kedar....