State Of Kerala And Others vs Bhavani Tea Produce Co. Ltd on 7 October, 1965
Since the handing over of coffee by the planter amounts to a sale to the Coffee Board and the mercantile system of accounting adopted by the assessee renders the income as one accrued in the year in which the relevant entry is made about the sale of coffee to the Coffee Board, we are of the view that the Appellate Tribunal was in error in deleting the sum of Rs. 5,85,025.10 which was the difference as per the award made by the Coffee Board for the coffee delivered during the season July 1, 1976, to June 30, 1977. The fact that the award made by the Coffee Board was not known by the close of the accounting period and became known only at a later point of time has no consequence since, before the assessment was completed, the award made by the Coffee Board was known and the quantum and the valuation declared by the Coffee Board were substituted for the estimate of income made by the assessee. The view of the Appellate Tribunal to the contrary and directing deletion of the addition of Rs. 5,85,025.10 received by the assessee for the accounting period 1976-77 (assessment year 1978-79), though definitely known later is a clear error of law. The view of the Appellate Tribunal militates against the decision of the Supreme Court in Bhavani Tea Produce Co.'s case [1966] 59 ITR 254.