SARDAR ARJUNSINGH AHLUWALIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, hereinafter called "the Act". By this reference, the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following questions of law to this court :

(2.) WHETHER, on the facts and in the circumstances, the Tribunal was justified in law in holding that as the liability itself was disputed by M/s. Kalyanmal Mills, the assessee's right to receive remuneration or commission under the terms of the agreement accrued only on the decision of the High Court on December 14, 1965 ? "

(3.) IT is, therefore, not permissible, in my opinion, to recast the provisions of Section 15(c) of the Act with a view to avoid hardship to an assessee. Moreover, the Legislature being aware of the fact that the applicability of the provisions of Section 15(c) of the Act was likely to cause hardship to an assessee if the arrears of salary received by him in a year were charged to income-tax in accordance with the provisions of Section 15(c) of the Act, has provided relief under the provisions of p. 89 of the Act. However, that is a matter which cannot have any bearing on the question of construction of Section 15(c) of the Act. That provision is independent of the provision contained in Section 15(a) of the Act and has to be given effect to, "according to the plain meaning of that provision. Whereas Section 15(a) of the Act provides that salary due from an employer in the previous year is taxable on accrual basis, Section 15(c) of the Act provides that arrears of salary received by an assessee in the previous year are taxable on receipt basis, if not subjected to charge earlier on accrual basis under Clause (a) of Section 15 of the Act. In my opinion, therefore, in view of the provisions of Section 15(c) of the Act, the answer to the first question referred to us must be in the affirmative.