AMRISH AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench "C", has referred the following question under S. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this Court :

(2.) THE assessment year is 1981 82 and the relevant accounting period is calendar year 1980. The assessee, which is a registered firm, occupied office premises situated at Manekchowk, Ahmedabad, of one M/s Chunilal Pranjivandas & Co. of Bombay and also utilized telephone and staff of the said firm. The assessee had similarly occupied these premises and utilized the facilities since calendar year 1977. It appears that there is no written agreement between the parties. However, the assessee debited in its books a sum of Rs. 1,00,000 towards user of the premises, telephone and staff for the year under consideration on the basis of mercantile system of accounting, which the assessee is following, and claimed the same as a deductible item of expenditure against its taxable income.

(3.) THE CIT(A) upheld the action of the ITO stating that it was an unascertained liability which had not been quantified and hence, as no demand was made by the Bombay firm, it cannot be said that any liability to make payment had arisen.