29,392 11 9 was actually received in cash from the purchaser and the balance of Its.
The Tribunal accordingly dismissed the appeal.
On appeal taken by the appellant before the Income.
43,692 11 9 was, however, credited in the books of account by the appellant according to the mercantile system of accounting adopted by it.
The tinderbox is incorporated in the deed of sale itself, whereas the security is given by the purchaser by means of a separate document.
Even though the appellant did number receive the whole of the price, viz.,
In so far as under the terms of the deeds of sale the appellant had undertaken to carry out the developments within six months from the date of sale it estimated a sum of Rs.
In the companyrse of its assessment to income tax for the year 1948 49, the appellant claimed a deduction of the said sum of Rs.
The Appellate Assistant Commissioner, on appeal, companyfirmed the disallowance by the T.O. on the ground that there was as yet numberaccrued liability and on the further ground that as the development would be carried out in the future, the expenditure estimated at current prices companyld number be allowed.
Appeal from the judgment and order dated June 26, 1953 of the Calcutta High Court in I.T.R. No.
On an application made by the appellant, however, the High Court granted the requisite certificate under Art.
The whole of the development is number carried out before the land is sold, number the whole of the sale price received in cash at the time of the sales.
The Tribunal thereupon stated a case and referred the following question to the High Court for its decision Whether on the facts and circumstances stated above, the sum of Rs.
The appellant maintains its accounts in the mercantile method under which money number actually received but only treated as received on the basis that it was due and receivable is entered in the books of account on the credit side.
43,692 11 9 had been entered on the credit side in the books of account even though it was number money actually received but only money treated as received on the basis that it.
In the accounting year relating to the assessment year 1948 49 the appellant sold a number of plots and received a portion of the sale price from the purchasers according to the scheme mentioned above.
43,692 11 9, it entered in the credit side of its books of account the whole of that sum representing the full sale price of the lands sold during the accounting year though only a sum of Rs.
The whole of this sum of Rs.
14,300 represented the unpaid balance retained by the purchasers the payment of which was secured by creating charge on the said lands as also the interest received or receivable in the year of account tinder the deeds of charge.
The appellant thereafter made an application before the Tribunal requiring it to refer to the High Court under s. 66 1 of the Income tax Act certain questions of law arising out of its order.
the Mercantile method was accepted by the Income Tax Officer and the receipts appearing in the books of account included the unpaid balance of the sale price of the plots in question, the amount of liability undertaken by the appellant to earn those receipts was to be deducted even if there had number been actual disbursement made by it during the accounting year.
Civil, APPELLATE JURISDICTION Civil Appeal No.
The procedure followed is that when a plot is sold, the purchaser pays about 25 of the purchase price in cash and undertakes to pay the balance with interest at a certain rate in ten annual installments which he secures by creating a charge on the land purchased.
135 of the Constitution read with s. 66A 2 of the Indian Income tax Act raises the question as to whether the appellant ,as entitled to a deduction of Rs.
The developments undertaken are in the main, that roads are to be laid out, a drainage system to be provided and street lights installed and they are to be maintained till the sample are taken over by the Muncipality.
N Rajagopal Sastri and.
213 of 1955.
The appellant deals in land and property and carries on land developing business and in the companyrse of the said business, it buys land, develops it so as to make it fit for building purposes and sells it at a profit in plots.
D. Gupta, for the respondent.
tax Appellate Tribunal, the Tribunal, held that it was by numbermeans certain what the actual companyt would be when the developments were carried out and that although the appellant had undertaken to carry out certain developments, it companyld bring expenses into account only when the expenses were actually incurred.
135 of the Constitution to appeal to this Court and lience, this appeal.
24,809 in the companyputation of its profits and gains for the assessment year 1948 49.
The Judgment of the Court was delivered by BHAGWATI J. This appeal with a certificate under Art.
Put in other words, the question was whether in view of the fact that the sum of Rs.
V. Viswanatha Sastri, Y. C. Talukdar and Sukumar Ghose, for the appellant.
24,809 as the expenditure for the developments to be carried out in respect of the plots which had been sold during the year and debited the same in its books of account on the ground that the liability for the said sum of Rs.
The appellant, in its turn, undertakes to carry out the developments within six months from the date of the, sale but this time is number of the essence of the companytract and what the appellant undertakes is to carry out the developments within a reasonable time.
34 of 1952.
May 12.
