COMMISSIONER OF INCOME TAX Vs. PURSHOTHAM GOKULDAS

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal referred the following question relating to the assessment year 1983-84 for the opinion of this court :

(2.) THE facts, as found by the Appellate Tribunal, are that the assessee claimed before the Assessing Officer a deduction of a sum of Rs. 4,42,330 being additional ground rent payable to the Divisional Forest Officer, Chalakudy. THE assessee is engaged in the business of manufacture of plywood. THE assessee was allotted various coupes and it could fell trees, cut and remove timber required for the manufacture of plywood. Under the terms of the agreement, the assessee had to cut and remove the timber by a specified date. THE assessee failed to remove the timber within the stipulated period on account of some labour trouble. THE assessee, then, applied for extension of time to remove the timber. Extension was allowed up to December 51, 1981, for removal of the logs subject to realisation of ground rent at double the maximum rate prescribed in the condition of the agreement. This is how the Department raised a demand of Rs. 4,42,330 which was disputed by the assessee firstly under a writ petition which was later withdrawn. THE Tribunal found that the assessee later filed a civil suit which is still pending. THE Tribunal clearly found in its order as under :

(3.) LEARNED standing counsel for the Department vehemently argues before us that there is no provision in the Act relating to this liability and, therefore, the liability is not statutory in nature. LEARNED counsel for the assessee is not able to find out any provision in the Act or in the rules framed thereunder in this behalf. Moreover, the Tribunal itself clearly stated in its order that indisputably the additional ground rent was claimed by virtue of certain provisions in the agreement. The finding recorded by the Tribunal is, therefore, incongruous. On the one hand, the Tribunal found that the liability took a statutory colour and, on the other hand, the Tribunal clearly said that the liability stems from the conditions of the agreement. There being no provision in the Act or in the rules framed thereunder, we take it that the liability stems from the conditions as contained in the agreement entered into between the assessee and the Government.