1987 (11) TMI 18

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....the following question has been referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the sales tax of Rs. 2,16,343 collected but not paid by the assessee during the previous year relevant to the assessment year 1976-77 is includible or not in the total income of the assessee ?" The relevant assessme....

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....counsel for the Revenue that as the aforesaid amount represents a revenue receipt and has admittedly not been paid over to the State Government, it should not be allowed as deduction. We are not able to accept this contention because the assessee follows the mercantile system of accounting and this amount is shown as an admitted liability. In similar circumstances, this court in CIT v. Devatha Cha....