COMMISSIONER OF INCOME TAX Vs. REHMAT KHAN

JUDGEMENT

(1.) THE Income-tax Appellate tribunal has referred the following question of law arising out of its order dated July 28, 1986, in respect of the assessment year 1981-82 under section 256(1) of the Income-tax Act, 1961 :

(2.) THE brief facts of the case are that the Income-tax Officer during the course of assessment proceedings found that as per the order of the Government, liquor shop of the assessee was required to be closed on Fridays and, accordingly, the shop remained closed on August 29, September 5, September 12, and September 19, 1980. THE assessee worked out the licence fee at Rs. 1,84,000 and calculated profit at Rs. 18,400 and thereby claimed loss of Rs. 2,02,400 from the Excise Department. Similarly, the shops remained closed on January 9, and January 16, 1981, and the loss against the licence fee is said to be at Rs. 92,000 and profit thereon was of Rs. 9,200 as claimed by the assessee. In accordance with the order of the Government, the assessee was allowed to open the shops from 10 a.m. to 4 p.m. instead of 10 a.m. to 10 p.m. on August 18 and 20, 1980. As per separate order, shops were to be closed on certain dates from 10 a.m. to 7 p.m. Thus the total claim of loss against the above closure is of Rs. 4,09,200. THE Income-tax Officer asked the assessee as to why the said amount be not treated as its income. It was submitted by the assessee that he has to go to the High Court/civil court against the loss so incurred. Since the books of account were maintained on the basis of the mercantile system, the said amount was treated as income of the assessee.