COMMISSIONER OF INCOME TAX Vs. K AND CO

JUDGEMENT

(1.) These six income tax references pertaining to the assessment years 1989-90 to 1993-94 raise the following questions :-

(2.) We shall first take up the questions in respect of the assessment year 1989-90. There are two sets of questions for this year. The first set comprises of three questions and the second set of the fourth which is essentially a consequential issue.

(3.) The assessee, during the relevant years, was engaged in the business of printing of lottery tickets and organizing lotteries on behalf of, inter alia, the Government of Sikkim. Additionally the respondentassessee also carried on the business of leasing of vehicles for commercial use. In respect of the financial year ending on 31.3.1989, the assessee had changed its method of accounting which it had adopted earlier. In the earlier years, the respondent-assessee had shown all its dispatches of tickets to its stockists as sales without being concerned with the question of whether the tickets were sold to the ultimate customers or not or whether the draw had taken place or not. In other words, in earlier years any dispatches made by the respondent-assessee during the relevant accounting year were treated as sales. With effect from the assessment year 1989-90, the respondent-assessee sought to adopt a different method of accounting. The respondent-assessee did not show all the dispatches to stockists as sales until and unless a draw had also taken place. In other words, those dispatches in the accounting year for which the draw was to take place in the succeeding year were not shown as sales. The assessee did not show such dispatches as part of the closing stock either. It is in this backdrop that the said questions have been formulated for our consideration.