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Jamshri Rajitsinghji Spg. And Wvg. ... vs Inspecting Assistant Commissioner on 9 December, 1991 cites

E. D. Sassoon And Company Ltd vs The Commissioner Of Income-Tax,Bombay ... on 14 May, 1954

Ltd.'s case (supra), it was pointed out that in that case the import entitlements were obtained by the assessee directly in the course of business and the value of the same constituted profits and gains of business within the meaning of Section 28(iv) and, therefore, the amounts realised by the assessee by the sale of import entitlements were profits of the assessee in its business and were neither capital nor receipts of a casual nature. In the present case, the appellant had not imported any goods and, therefore, had not received any benefit during the year. The benefit could accrue to the appellant in the form of concession in excise duty in the event the appellant were to import goods which, as admitted by the CIT(Appeals), was not done during the relevant accounting year. The learned counsel has cited a host of cases, to some of which we may now make a reference.
Supreme Court of India Cites 31 - Cited by 1764 - N H Bhagwati - Full Document

The Indian Overseas Bank Ltd vs The Commissioner Of Income-Tax, Madras on 23 April, 1970

The counsel's main reliance was on a decision of the Madras High Court in the case of Indian Overseas Bank v. CIT [19901 183 ITR 200 : 51 Taxman 283 where reference was made to Shoorji Vallabhdas & Co.'s case (supra) by Their Lordships of the Madras High Court who held that the levy of income-tax is on income, and although the Income-tax Act has taken note of the twin points of time at which the liability to tax is attracted, namely, the accrual of income or its receipt, yet the substance of the matter is income, and if income does not result at all, there cannot be a tax even though for the purpose of book keeping an entry is made about a hypothetical income which does not materialise and the mere book keeping entry cannot be income unless income has actually resulted.
Supreme Court of India Cites 6 - Cited by 128 - K S Hegde - Full Document

Commissioner Of Income Tax, Calcutta vs British Paints India Ltd on 13 December, 1990

The counsel also referred to another decision of the Supreme Court in CIT v. British Paints India Ltd. [1991] 188 ITR 44 : 54 Taxman 499 where the Supreme Court held that even if the assessee had adopted a regular system of accounting it was the duty of the Assessing Officer under Section 145 of the Income-tax Act to consider whether the correct profits and gains could be deduced from the accounts so maintained. In that case, the company had, as a consistent practice, valued its goods in process and finished products exclusively at cost of raw materials excluding overhead expenses. The ITO held that there was no justification to recognise a practice of valuing stock otherwise than in accordance with the well recognised principle of accounting which required the stock to be valued at cost or market price whichever was lower. He, therefore, calculated the value of opening and closing stock by adding overhead expenses. The AAC confirmed the order. The Tribunal held that there was no evidence to show that the goods in stock deteriorated in value and that there was no justification for excluding the overhead expenditure. The High Court, on a reference, reversed the decision of the Tribunal and, on appeal to the Supreme Court, the Supreme Court, inter alia, held that the question to be determined by the Assessing Officer in exercise of his powers under Section 145 is whether or not income can properly be deduced from the accounts maintained by the assessee even if the accounts are correct and complete to the satisfaction of the Officer and the income has been computed in accordance with the method regularly employed by the assessee. It is not only the right but the duty of the Assessing Officer to consider whether or not the books disclose the true state of accounts and the correct income can be deducted therefrom. It is incorrect to say that the Officer is bound to accept the system of accounting regularly employed by the assessee, the correctness of which had not been questioned in the past. There is no estoppel in these matters and the Officer is not bound by the method followed in the earlier years. Relying on this judgment, it was pointed out by the counsel that the mere fact that an entry was made in the accounts as was being made in the past was not enough for the revenue authorities to decide the issue against the assessee when on the facts it was clear that no real income had, in fact, accrued.
Supreme Court of India Cites 2 - Cited by 516 - T K Thommen - Full Document

Addl. Commissioner Of Income-Tax And ... vs Indian Overseas Bank on 17 January, 1979

We need refer to only one more case of the Madras High Court in the case of CIT v. Indian Overseas Bank [1985] 151 ITR 446. In that case, the Bank dealing in foreign currencies on behalf of its customers had certain foreign exchange contracts entered into by it which were not settled on the close of the accounting period ended December 31,1967. As the contracts were in different foreign currencies, the loss or profit arising on outstanding contracts was estimated based on the rate of exchange as on the closing day. In view of the devaluation of Sterling in November 1967, the loss arising on account of outstanding foreign exchange amounted to Rs. 9,20;125. The assessee-bank made provision for this in its accounts on the ground that this amount had to be provided for before ascertaining the profit. The ITO estimated the loss as purely anticipated and unascertained. The AAC reversed the order which was confirmed by the Tribunal. The Madras High Court, on these facts, held that only the actual loss incurred can be deducted but not any probable or possible loss. As there was no settlement of the outstanding contracts, the amount claimed could only be considered to be notional or anticipated loss and such notional or anticipated loss could not be allowed as a deduction. The same principle on a parity of reasoning would apply to the taxability of anticipated profit or concession in excise duty which the appellant expected to get in the event of import of raw material. Since such event had not taken place during the year of account, the benefit, if any, was inchoate, incapable of actual determination and had, in effect, not accrued during the year of account. We are, therefore, inclined to accept the stand of the appellant that this was not an income of the appellant during the year. All the principles laid down by the various judicial pronouncements, to which we have referred in the earlier paragraphs, have accepted the theory of real income and whatever has been stated in these judgments would seem to apply in a case of this type. No real income had accrued to the appellant by virtue of getting or expecting to get advance licences irrespective of the fact that such estimated benefit was accounted for in the books of the appellant. This fact, as we have pointed out earlier, is not determinative of the issue of the tax ability of this amount. We would, therefore, hold that the amount of Rs. 31,75,281, being the value of material import entitlement receivable by the appellant, does not constitute the income of the appellant for the year under appeal since it had neither accrued nor arisen during the year of account. This ground of appeal is, therefore, allowed.
Madras High Court Cites 25 - Cited by 28 - Full Document
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