COMMISSIONER OF INCOME TAX Vs. C M RAJGARHIA

JUDGEMENT

(1.) AT the instance of the CIT , Patna Bench "A", the Tribunal has made a reference under S. 256(1) of the INCOME TAX ACT, 1961, hereinafter referred to as "the Act". The question which has been referred for the opinion of this Court reads as under :

(2.) THE facts which I am detailing will clarify the issue arising in this case : The assessee is a registered firm dealing in mica. The assessment years, with which the said common question of law is involved are 1965 -66, 1966 -67 and 1967 -68. Certain items of expenditure were claimed by the assessee as deductible against the profits for one or the other respective years of assessment. The ITO rejected the claims on the ground that since the assessee follows the mercantile system of accounting, the deductions claimed did not fall for consideration during the year in which they had been claimed. We will presently give the details of the expenses which have been claimed and for the years for which they have been allowed. The assessee being aggrieved by the disallowances appealed to the AAC for all these years. The AAC took up all the appeals for hearing together and found that although some of the expenses were not allowable for the year for which they had been claimed, they were duly admissible against the profits of another year, of which he was in seisin in appeal. The AAC, accordingly, while upholding the disallowance of the expenses claimed against the profits of a particular year, allowed it against the profits of another year which also was in appeal before him.

(3.) WE may now indicate the nature of expenses which had been claimed by the assessee and the years for which they had been claimed, as also the year in which they had been allowed by the AAC. It will be proper to give it in a tabular form :