COMMISSIONER OF INCOME TAX Vs. ROHIT MILLS LIMITED

JUDGEMENT

(1.) AT the instance of Revenue the Tribunal, Ahmedabad 'C' Bench referred the following question of law arising out of its appellate order dt. 2nd Dec., 1982 in relation to asst. year 1977 78 in the case of the respondent assessee :

(2.) AS a result of coming into force of Bonus (Amendment) Act, 1977 (hereinafter called the Act of 1977) which came into force w.e.f. 3rd Sept., 1977, the assessee incurred additional liability of Rs. 15,58,399 for payment of bonus. The assessee follows the mercantile system of accounting. His accounting year commences on 1st January every year and closes on 31st December, that is to say, a calender year is the accounting year for the assessee. According to S. 2 of Act of 1977, the Payment of Bonus Act, 1965 was to have effect in respect of the accounting year commencing on any day in the year 1976 as if the amendment specified in ss. 3 to 20 of the Act of 1977 had been made in that Act. As by this provision, modification in computation of bonus on account of the Act of 1977 was made effective specifically in respect of accounting year commencing within the calender year 1976. As the assessee was keeping his accounts for the calender year, for him accounting year commencing from 1st Jan., 1976 was the accounting year to which the modification applied. As the accounting year 1976 closed on 31st Dec., 1976, relevant to asst. yr. 1977 78, notwithstanding the fact that when the accounting year closed, the assessee had not incurred any liability for the payment of additional bonus when as a result of statutory provision contained in the Act, 1977 it became the liability in respect of accounting year 1976, the assessee claimed deduction of the said amount for the purpose of computing profits and gains for his business relying on the provisions of S. 43(c) r/w s. 36(1)(ii).

(3.) DURING the course of argument, it was brought to the notice of the Court that when the ITO has disallowed the deduction for the asst. year 1977 78, the assessee had claimed as a measure of abundant caution the said amount of deduction for the succeeding asst. year 1978 79 and that claim of the assessee was accepted. However, when the claim was allowed by the Tribunal for the year 1977 78, for giving effect to this order, the assessment order of 1978 79 was rectified and the amount allowed in the asst. year 1977 78 was deleted from the computation of income for that year and consequently the benefit of deduction was given in respect of asst. year 1977 78. The assessee is a corporation which is subjected to a flat rate of taxation which undisputedly was the same for the asst. yrs. 1977 78 and 1978 79. The total income after disallowing deduction claimed by the assessee in asst. year 1978 79 came to be Rs. 34 lakhs and odd and for the asst. year 1977 78 the total income after disallowing deduction came to Rs. 23,37,000. There being no dispute about the allowability of the aforesaid sum as deduction from the income and the only dispute is about the year in which the deduction should be allowed. It is apparent that whether the allowance is to be made in 1977 78 or in 1978 79, it is not going to affect the Revenue in any manner and the assessee is also not going to be affected in any manner. In that event, in our opinion, the question of law raised in this case is of sheer academic value which need not be answered. We decline to do so.