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Commissioner Of Income-Tax vs Lachhman Das Mathura Das on 28 January, 1980 cites

Saraya Sugar Mills (P.) Ltd., Gorakhpur vs The Commissioner Of Income-Tax on 11 May, 1978

2. So far as the first two questions are concerned, they are clearly covered by the decision of this court in the case of Saraya Sugar Mills P. Ltd, v. CIT [1972] 116 ITR 387 (FB) and in view of that decision the assessee's claim for interest on the arrears of sales tax and interest on the outstanding balance of the sales tax was not an allowable deduction. Coming now to the facts relevant for answering the third and fourth questions.
Allahabad High Court Cites 31 - Cited by 24 - R M Sahai - Full Document

A.P.S. Cold Storage And Ice Factory vs Commissioner Of Income-Tax on 23 July, 1979

We are of the view that the decision of the Tribunal cannot be upheld. Before a claim for damages can be allowed even in cases where the assessee follows the mercantile system, the liability must be in praesenti, i.e., it must be an actual liability, and not one which may arise in future. Contingent liability which may or may not arise cannot be allowed as deduction. The decisions of this court in the cases of A.P.S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863, New Victoria Mills Co. Ltd. v. CIT [1966] 61 ITR 395, CIT v. Mattwlal Baldeo Prasad [1961] 42 ITR 517 establish this principle, as also the pronouncement of the Supreme Court in the case of CIT v. Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC). Counsel for the assessee urged that Clause 27 of the agreement created an ascertained liability. We are not inclined to accept this argument, for, although Clause 27, which we have already extracted earlier, permitted a reduction of the contract price by half per cent. per week of the contract value of such portion of the plant as had not been supplied, but not exceeding ten per cent. of the contract value of such plant by the State Electricity Board, the provision does not finally set out the liquidated amount of ascertained liability. Before a deduction under Clause 27 can be made by the U.P. Electricity Board, an investigation of certain facts has to be made. The Electricity Board has to find out the contract value of that portion of the plant which as a result of the delay could not be commercially and efficiently used during each week between the appointed time, and the actual time of acceptance. Further, the half per cent. deduction to be made under this clause has to be scaled down if it exceeds ten per cent. of the contract value of such portion of the plant. Clause 27 thus does not straightaway create any liability in praesenti. The liability is created only after the period for which the Electricity Board has not been able to work the plant commercially and efficiently, ascertained. Now, the assessee would in these circumstances be unaware of the period of time for which the State Electricity Board has not been able to work its plant commercially and efficiently and neither would the Electricity Board be in a position to know the period of deficient commercial and efficient working of its plant on account of non-performance of the contract in full by the assessee. A time lag would be there before such ascertainment is possible. Further, the liability under the clause arises only in case of non-working of the plant efficiently and commercially and not otherwise. Thus, mere breach of the contract does not in all cases create a liability. This apart, as the assessee pressed for waiver of the amount which was ultimately allowed, the liability under Clause 27 could not be said to have crystallized till such time as the waiver issue was decided by the Electricity Board. In the present case, as has been seen, the amount was ultimately waived.
Allahabad High Court Cites 3 - Cited by 14 - Full Document

The Kanpur Tannery Ltd., Kanpur vs The Commissioner Of Income Tax, U.P. And ... on 19 December, 1957

We are of the view that the decision of the Tribunal cannot be upheld. Before a claim for damages can be allowed even in cases where the assessee follows the mercantile system, the liability must be in praesenti, i.e., it must be an actual liability, and not one which may arise in future. Contingent liability which may or may not arise cannot be allowed as deduction. The decisions of this court in the cases of A.P.S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863, New Victoria Mills Co. Ltd. v. CIT [1966] 61 ITR 395, CIT v. Mattwlal Baldeo Prasad [1961] 42 ITR 517 establish this principle, as also the pronouncement of the Supreme Court in the case of CIT v. Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC). Counsel for the assessee urged that Clause 27 of the agreement created an ascertained liability. We are not inclined to accept this argument, for, although Clause 27, which we have already extracted earlier, permitted a reduction of the contract price by half per cent. per week of the contract value of such portion of the plant as had not been supplied, but not exceeding ten per cent. of the contract value of such plant by the State Electricity Board, the provision does not finally set out the liquidated amount of ascertained liability. Before a deduction under Clause 27 can be made by the U.P. Electricity Board, an investigation of certain facts has to be made. The Electricity Board has to find out the contract value of that portion of the plant which as a result of the delay could not be commercially and efficiently used during each week between the appointed time, and the actual time of acceptance. Further, the half per cent. deduction to be made under this clause has to be scaled down if it exceeds ten per cent. of the contract value of such portion of the plant. Clause 27 thus does not straightaway create any liability in praesenti. The liability is created only after the period for which the Electricity Board has not been able to work the plant commercially and efficiently, ascertained. Now, the assessee would in these circumstances be unaware of the period of time for which the State Electricity Board has not been able to work its plant commercially and efficiently and neither would the Electricity Board be in a position to know the period of deficient commercial and efficient working of its plant on account of non-performance of the contract in full by the assessee. A time lag would be there before such ascertainment is possible. Further, the liability under the clause arises only in case of non-working of the plant efficiently and commercially and not otherwise. Thus, mere breach of the contract does not in all cases create a liability. This apart, as the assessee pressed for waiver of the amount which was ultimately allowed, the liability under Clause 27 could not be said to have crystallized till such time as the waiver issue was decided by the Electricity Board. In the present case, as has been seen, the amount was ultimately waived.
Allahabad High Court Cites 4 - Cited by 13 - V Bhargava - Full Document

New Victoria Mills Co. Ltd vs Commissioner Of Income-Tax, U. P. on 20 March, 1965

We are of the view that the decision of the Tribunal cannot be upheld. Before a claim for damages can be allowed even in cases where the assessee follows the mercantile system, the liability must be in praesenti, i.e., it must be an actual liability, and not one which may arise in future. Contingent liability which may or may not arise cannot be allowed as deduction. The decisions of this court in the cases of A.P.S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863, New Victoria Mills Co. Ltd. v. CIT [1966] 61 ITR 395, CIT v. Mattwlal Baldeo Prasad [1961] 42 ITR 517 establish this principle, as also the pronouncement of the Supreme Court in the case of CIT v. Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC). Counsel for the assessee urged that Clause 27 of the agreement created an ascertained liability. We are not inclined to accept this argument, for, although Clause 27, which we have already extracted earlier, permitted a reduction of the contract price by half per cent. per week of the contract value of such portion of the plant as had not been supplied, but not exceeding ten per cent. of the contract value of such plant by the State Electricity Board, the provision does not finally set out the liquidated amount of ascertained liability. Before a deduction under Clause 27 can be made by the U.P. Electricity Board, an investigation of certain facts has to be made. The Electricity Board has to find out the contract value of that portion of the plant which as a result of the delay could not be commercially and efficiently used during each week between the appointed time, and the actual time of acceptance. Further, the half per cent. deduction to be made under this clause has to be scaled down if it exceeds ten per cent. of the contract value of such portion of the plant. Clause 27 thus does not straightaway create any liability in praesenti. The liability is created only after the period for which the Electricity Board has not been able to work the plant commercially and efficiently, ascertained. Now, the assessee would in these circumstances be unaware of the period of time for which the State Electricity Board has not been able to work its plant commercially and efficiently and neither would the Electricity Board be in a position to know the period of deficient commercial and efficient working of its plant on account of non-performance of the contract in full by the assessee. A time lag would be there before such ascertainment is possible. Further, the liability under the clause arises only in case of non-working of the plant efficiently and commercially and not otherwise. Thus, mere breach of the contract does not in all cases create a liability. This apart, as the assessee pressed for waiver of the amount which was ultimately allowed, the liability under Clause 27 could not be said to have crystallized till such time as the waiver issue was decided by the Electricity Board. In the present case, as has been seen, the amount was ultimately waived.
Allahabad High Court Cites 8 - Cited by 37 - Full Document

Commissioner Of Income-Tax vs Mathulal Baldeo Prasad. on 5 October, 1960

We are of the view that the decision of the Tribunal cannot be upheld. Before a claim for damages can be allowed even in cases where the assessee follows the mercantile system, the liability must be in praesenti, i.e., it must be an actual liability, and not one which may arise in future. Contingent liability which may or may not arise cannot be allowed as deduction. The decisions of this court in the cases of A.P.S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863, New Victoria Mills Co. Ltd. v. CIT [1966] 61 ITR 395, CIT v. Mattwlal Baldeo Prasad [1961] 42 ITR 517 establish this principle, as also the pronouncement of the Supreme Court in the case of CIT v. Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC). Counsel for the assessee urged that Clause 27 of the agreement created an ascertained liability. We are not inclined to accept this argument, for, although Clause 27, which we have already extracted earlier, permitted a reduction of the contract price by half per cent. per week of the contract value of such portion of the plant as had not been supplied, but not exceeding ten per cent. of the contract value of such plant by the State Electricity Board, the provision does not finally set out the liquidated amount of ascertained liability. Before a deduction under Clause 27 can be made by the U.P. Electricity Board, an investigation of certain facts has to be made. The Electricity Board has to find out the contract value of that portion of the plant which as a result of the delay could not be commercially and efficiently used during each week between the appointed time, and the actual time of acceptance. Further, the half per cent. deduction to be made under this clause has to be scaled down if it exceeds ten per cent. of the contract value of such portion of the plant. Clause 27 thus does not straightaway create any liability in praesenti. The liability is created only after the period for which the Electricity Board has not been able to work the plant commercially and efficiently, ascertained. Now, the assessee would in these circumstances be unaware of the period of time for which the State Electricity Board has not been able to work its plant commercially and efficiently and neither would the Electricity Board be in a position to know the period of deficient commercial and efficient working of its plant on account of non-performance of the contract in full by the assessee. A time lag would be there before such ascertainment is possible. Further, the liability under the clause arises only in case of non-working of the plant efficiently and commercially and not otherwise. Thus, mere breach of the contract does not in all cases create a liability. This apart, as the assessee pressed for waiver of the amount which was ultimately allowed, the liability under Clause 27 could not be said to have crystallized till such time as the waiver issue was decided by the Electricity Board. In the present case, as has been seen, the amount was ultimately waived.
Allahabad High Court Cites 12 - Cited by 13 - Full Document

The Commissioner Of Income-Tax, ... vs Swadeshi Cotton And Flour Mills on 17 April, 1964

We are of the view that the decision of the Tribunal cannot be upheld. Before a claim for damages can be allowed even in cases where the assessee follows the mercantile system, the liability must be in praesenti, i.e., it must be an actual liability, and not one which may arise in future. Contingent liability which may or may not arise cannot be allowed as deduction. The decisions of this court in the cases of A.P.S. Cold Storage and Ice Factory v. CIT [1979] 119 ITR 709, Kanpur Tannery Ltd. v. CIT [1958] 34 ITR 863, New Victoria Mills Co. Ltd. v. CIT [1966] 61 ITR 395, CIT v. Mattwlal Baldeo Prasad [1961] 42 ITR 517 establish this principle, as also the pronouncement of the Supreme Court in the case of CIT v. Swadeshi Cotton and Flour Mills P. Ltd. [1964] 53 ITR 134 (SC). Counsel for the assessee urged that Clause 27 of the agreement created an ascertained liability. We are not inclined to accept this argument, for, although Clause 27, which we have already extracted earlier, permitted a reduction of the contract price by half per cent. per week of the contract value of such portion of the plant as had not been supplied, but not exceeding ten per cent. of the contract value of such plant by the State Electricity Board, the provision does not finally set out the liquidated amount of ascertained liability. Before a deduction under Clause 27 can be made by the U.P. Electricity Board, an investigation of certain facts has to be made. The Electricity Board has to find out the contract value of that portion of the plant which as a result of the delay could not be commercially and efficiently used during each week between the appointed time, and the actual time of acceptance. Further, the half per cent. deduction to be made under this clause has to be scaled down if it exceeds ten per cent. of the contract value of such portion of the plant. Clause 27 thus does not straightaway create any liability in praesenti. The liability is created only after the period for which the Electricity Board has not been able to work the plant commercially and efficiently, ascertained. Now, the assessee would in these circumstances be unaware of the period of time for which the State Electricity Board has not been able to work its plant commercially and efficiently and neither would the Electricity Board be in a position to know the period of deficient commercial and efficient working of its plant on account of non-performance of the contract in full by the assessee. A time lag would be there before such ascertainment is possible. Further, the liability under the clause arises only in case of non-working of the plant efficiently and commercially and not otherwise. Thus, mere breach of the contract does not in all cases create a liability. This apart, as the assessee pressed for waiver of the amount which was ultimately allowed, the liability under Clause 27 could not be said to have crystallized till such time as the waiver issue was decided by the Electricity Board. In the present case, as has been seen, the amount was ultimately waived.
Supreme Court of India Cites 9 - Cited by 153 - S M Sikri - Full Document

National Newsprint And Paper Mills Ltd. vs Commissioner Of Income-Tax on 28 April, 1977

The Madhya Pradesh High Court had occasion to consider the accrual of liability for damages in cases where there was a waiver clause in the case of National Newsprint and Paper Mills Ltd. v. CIT [1978] 114 ITR 172 (MP) and with respect rightly held that the liability in such cases would not crystallize till the waiver matter was disposed of. We are, therefore, of the view that the liability for Rs. 69,383 did not crystallize in the accounting period relevant to the assessment year in question. This disposes of the third question.
Madhya Pradesh High Court Cites 6 - Cited by 12 - Full Document
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