COMMISSIONER OF INCOME TAX Vs. SAKET KRISHI UDYOG

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law Under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as the Act, for opinion of this court :

(2.) Briefly stated facts giving rise to the present reference are as follows: The assessee is a firm carrying on business of purchase and sale of fertilisers at Kanpur. During the year under consideration, the distribution of fertilisers was controlled by the State Government and the assessee could charge the sale price as fixed by the U. P. Government from time to time. With effect G from June 14, 1974, the Government of Uttar Pradesh issued an Ordinance through which the fertiliser dealers were required to sell their stocks as on May 31, 1974, at the old rates. The fertiliser dealers challenged this order of the U. P. Government but the High Court upheld it. The dealers then went to the Supreme Court which by an interim order allowed the dealers to sell the H fertilisers at the new rates provided the extra amount so realised by them was deposited in a separate account with the district magistrate and the bank passbook of the savings bank account was pledged with the district magistrate, Kanpur. The Income-tax Officer, while examining the case, found that as a result of the aforesaid order of the Supreme Court, the assessee had deposited only Rs. 10,000 out of the cost price, with the post office and the balance of Income Tax Reports 22-11-2004 44 Rs. 1,00,298 was not deposited with the post office but was shown as a Iiability in the balance-sheet. After examining the assessee's reply, he came to the conclusion that the liability of Rs. 1,00,298 was not accepted by the assessee nor this amount was deposited in the saving bank account in pursuance of the order of the Supreme Court. He, therefore, added this amount of Rs. 1,00,298 as the income earned by the assessee during the year under consideration.

(3.) The assessee challenged the addition before the Commissioner of Income- tax (Appeals), Kanpur, who deleted this addition following the order dated March 26, 1977, of the Appellate Tribunal in I. T. A. No. 2126 (All) of 1975-76. He held that the amount of Rs. 1,00,298 was not taxable in this year as the assessee had no right to the sale proceeds in this year.