CIT Vs. HEERALAL KATARIA

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as 'the Tribunal') has made reference for our answer to the following questions in D.B. IT Ref. No. 49 of 1989: (i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in not upholding the disallowance of interest payment of Rs. 21,600 claimed by the assessee under the head 'Finance commission' which did not pertain to the accounting period relevant to the assessment year under reference ? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the disallowance of Rs. 21,600 out of the total liability of Rs. 43,200 claimed by the assessee as having accrued during the year on account of hire -purchase commission ? (iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding that the liability of Rs. 43,200 claimed by way of accrued hire -purchase commission was in reality the amount of interest projected over the period of hire -purchase agreements, and that therefore only the interest relatable to the relevant account year was admissible as deduction ? And the following questions have been referred in D.B. IT Ref. No. 22 of 1990: 1. Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the disallowance of Rs. 41,866 claimed by the assessee under the head 'Finance commission' which did not pertain to the accounting period relevant to the assessment year under reference ?

(2.) WHETHER on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the liability of Rs. 1,12,000 claimed by way of accrued hire -purchase commission was in reality the amount of interest projected over the period of hire -purchase agreements and, therefore, only the interest relatable to the relevant accounting year was admissible as deduction ? 2. The aforesaid questions have been referred for the same assessee on same set of facts. Thus, both the cases are taken up together for hearing and decided by this common order.

(3.) LEARNED Counsel for the revenue submits that it being hire -purchase agreement, title of the vehicle was not passed on to the assessee and thereby, the amount of finance commission, which was actually paid in the subsequent years cannot be claimed as the expenditure in the year when the hire -purchase agreement was entered, thus, the deduction towards finance commission cannot be taken entirely in the year of the hire -purchase agreement rather same has to spread in the years in which the aforesaid commission was actually paid by the assessee in installments.