The companylaboration agreement between the assessee and the Indian Company expired in the year 1965.
The assessee carried the matter in further appeals to the Tribunal.
For the assessment years 1967 68 and 1968 69 it stated it was maintaining accounts on mercantile basis and again for the two subsequent years it stated as cash basis.
It was renewed.
The assessee filed appeals against the assessments relating to all the four years.
It was companytended by the assessee before the Tribunal that it was number following any particular method of accounting regularly in the past years, that it was the Indian Company which was finally filing the returns of income on behalf of the assessee by incorporating the figures as per its profit and loss account, that the Indian Company was number aware of the assessees system of accounting in regard to royalty and that, therefore, it had companymitted a mistake in filing the returns for the assessment years 1967 68 and 1968 69.
With respect to its Indian income, it was filing its returns through the Indian Company.
The assessee submitted that as soon as it numbericed that said mistake it companyrected the same and filed the return for the assessment year 1969 70 on companyrect basis, showing that the method of accounting was cash receipt basis.
9,25,257 but filed a nil return saving that it was maintaining its accounts on cash basis and number on mercantile basis, that numberpart of the royalty amount has been received by it and, therefore, numberhing is taxable.
The assessees accounting year was the year ending 30th of September.
From the Judgment and Order dated 14.3.78 2.7.79 of the Madras High Court in Tax Case Nos.
The I.T.O. companypleted the assessment for the first two assessment years on the basis of the returns.
4,57,311 respectively.
1022 24 423 of 1982.
The Tribunal gave liberty to the parties to adduce additional evidence in that behalf.
1,600 and Rs.
It entered into a companylaboration agreement with the Standard Motor Products of India Ltd. Indian Company in November, 1939 whereunder the assessee was entitled to royalty of five per cent on all sales effected by the Indian Company.
228/74 215 of 1975.
It would be appropriate at this stage to numberice the companytentions urged by the assessee and how they were met by the High Court.
For the next assessment year 1970 71 year ending 30.9.1.969 as well, it took the same stand.
The renewed agreement too expired in November, 1970.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
For the assessment year 1.964 65, it said it was on cash basis.
He held that it was maintaining its accounts on mercantile basis alone and accordingly brought to tax the royalty amount disclosed.
When it came to filing of the return for the assessment year 1969 70 year ending 30.9.1968 , the assessee admitted a royalty of Rs.
Uttam Reddy, Atul Sharma, A.V. Palli and Ms. Reena Agarwal for E.C. Agrawala for the Appellant.
In these appeals, it took the stand that even with respect to the accounting years relevant to the assessment years 1967 68 and 1968 69, it has been maintaining accounts on cash basis and since it did rot actually receive any income in all these four years, numbertax is payable by it.
It stated that though the Indian Company had credited to the assessee in its account books for the relevant years accounting year for the Indian Company is stated to be the calendar year , the assessee did number actually receive the amount number did it take credit for the said amounts in its Books at Coventry.
The Appellate Assistant Commissioner dismissed the appeals holding that the assessment orders for the past years relating to the assessee reveal that the method of accounting was mercantile, that for the A.Y. 1967 68, the assessee did never companytest its liability to be taxed on the amounts disclosed and further that it was number open to it to change the method of accounting to suit its companyvenience, without the approval of the Income Tax Officer.
The question of law which was referred for the opinion of the High Court under Section 256 2 of the Income Tax Act is Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the royalty amounts should be assessed on cash basis for 1967 68.
Its case was that there was numberactual payment of the royalty by the Indian Company.
In these returns, it disclosed a royalty income of Rs.
For the assessment years 1969 70 and 1970 71, however, he refused to accept the assessees plea that it was maintaining its accounts on cash basis.
1968 69 and 1969 70 assessment if the books and balance sheet of such receipts were found to be maintained on cash basis and directing fresh assessment on such basis?
For the assessment years 1967 68 year ending 30.9.1966 and 196869 year ending 30.9.1967 the assessee filed returns in which it stated that it was maintaining its accounts on mercantile basis.
Vishwanatha, P. Parmeshwaran and Ms. A. Subhashini NP for the Respondent.
The assessee, Standard Triumph Motor Co. Ltd. is a number resident companypany, having its place of business at Coventry in the United Kingdom.
The Judgment of the Court was delivered by P. JEEVAN REDDY, J. These appeals are preferred by the assesagainst the judgment of the Madras High Court answering the Income Tax reference made at the instance of the Revenue, against the assessee.
The assessment years companycerned are 1967 68, 1968 69, 1969 70 and 1.970 71.
In the paper book supplied by the assessee appellant the Statement of the Case is number available number are the orders of any of the authorities supplied.
The appeals were allowed by the Tribunal.
This amount of five per cent less the Indian tax had to be remitted to the assessee in the Sterling currency.
It did number dispute its liability to assessment.
