It is the companytention of the income tax authorities that the question should be answered against the assessee.
161 towards the sales tax liability for the assessment year 1971 72 The High Court after hearing both the sides answered the question in the affirmative in favour of the assessee and against the Revenue, as numbered earlier.
It is this answer of the High Court that is challenged on behalf of the Revenue by the appellate Commissioner of the Income Tax, Learned companynsel for the appellant submitted that the High Court has misunderstood and misapplied the ratio of decision of this Court in Kedarnath Jute Manufacturing Co. Ltd. supra That once it is number in dispute that the assessee was following mercantile system of accounting.
The Income lax Officer disallowed the said deduction in the relevant assessment year, as according to the Income tax Officer the assessee was following mercantile system of accounting and hence the liability to pay sales tax accrued to it prior to the said year.
11,02,698.
During the previous year relevant to assessment year 1962 63, the assessee was liable to pay sales tax under the Central Sales Tax Act.
JUDGEMENT 1996 1 SCR 197 The Judgment of the Court was delivered by B, MAJMUDAR, J. Leave granted.
On the basis of the aforesaid order of the Tribunal, the respondent assessee claimed deduction of the said amount as business expenditure in respect of the assessment for the previous year 1970 71 since according to the assessee the sales tax liability was of the assessment year 1971 72.
The Sales Tax Officer Completed the assessment in respect of assessment year 1962 63 on 31st March, 1966 and demanded an additional amount of Rs.
A few relevant facts centering round the question in companytroversy deserve to be numbered at this stage.
The Tribunal by its order dated 28th May, 1970 reduced the additional demand of sales tax Rs.2,22,161.
The appellant Commissioner of Income Tax, has brought in challenge the judgment and order dated 13th May, 1987 passed by the High Court of Orissa at Cuttack answering the referred question under Section 256 1 of the Income tax Act, 1961 against the Revenue and in favour of the assessee.
The respondent assessee is a limited companypany which manufactures and sells steel tubes in the State of Orissa.
The assessee unsuccessfully carried the matter in appeal and then filed second appeal before the Sales Tax Tribunal.
The relevant assessment year is 1971 72.
By companysent of learned Advocates of both the sides the appeal is finally heard and is being disposed by this judgment.
