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Commissioner of Income-tax, Karnataka-i Vs. Mysore Tobacco Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Referred Case No. 30 of 1975
Judge
Reported in[1979]119ITR87(KAR); [1979]119ITR87(Karn)
ActsIncome Tax Act, 1961 - Sections 4
AppellantCommissioner of Income-tax, Karnataka-i
RespondentMysore Tobacco Co. Ltd.
Appellant AdvocateS.R. Rajasekharamuthy, Adv.
Respondent AdvocateK.P. Kumar, Adv. for King and Partridge
Excerpt:
- code of civil procedure, 1908. section 96: [s.r. bannurmath & a.n. venugopala gowda, jj] regular first appeal court fee in appeal - suit for partition and separate possession - payment of court fee of rs.200/-on the plaint under section 35(2) dismissal of suit appealed against - payment of court fee of rs.200/- in the appeal office objection specific finding by the trial court as to ouster of the plaintiff from the suit schedule property whether plaintiff is liable to pay court fee under section 35(1) or under section 35(2) of the karnataka court fees & suits valuation act, 1958 held, merely because the trial court has held that plaintiff is not in possession and has been excluded from possession there will be no change in the court fee payable in the appeal filed by the plaintiff..........case, the tribunal was right in holding that the sum of rs. 2 lakhs could not be assessed as the income of the assessee for the previous year ending march 31, 196 ?' 2. the assessee is m/s. mysore tobacco co. ltd. it had certain dealings with i. t. c. ltd. the assessee used to supply tobacco grown in karnataka to i. t. c. ltd. in order to facilitate regular supply of tobacco, i. t. c. ltd. used to advance moneys from time to time either as loans or advances against future supplies to be used by the assessee for the purpose of distributing the same amongst growers of tobacco. in reply to certain representations made by the assessee for the increase in the prices during the accounting year 1965-66, i. t. c. ltd. stated that it was not possible for it to increase the prices of tobacco,.....
Judgment:

Venkataramaiah, J.

1. The question referred by the Income-tax Appellate Tribunal, Bangalore Bench, under s. 256(1) of the I. T. Act, 1961, reads :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 2 lakhs could not be assessed as the income of the assessee for the previous year ending March 31, 196 ?'

2. The assessee is M/s. Mysore Tobacco Co. Ltd. It had certain dealings with I. T. C. Ltd. The assessee used to supply tobacco grown in Karnataka to I. T. C. Ltd. In order to facilitate regular supply of tobacco, I. T. C. Ltd. used to advance moneys from time to time either as loans or advances against future supplies to be used by the assessee for the purpose of distributing the same amongst growers of tobacco. In reply to certain representations made by the assessee for the increase in the prices during the accounting year 1965-66, I. T. C. Ltd. stated that it was not possible for it to increase the prices of tobacco, but it would, however, waive the outstanding advance of Rs. 2 lakhs in order to accommodate the assessee. This was by a letter dated 16th April, 1966. Two questions arose for consideration before the Tribunal : (1) whether the amount of Rs. 2 lakhs was taxable income; and (2) if it was taxable, in which year it had to be taxed. The first question, namely, the taxability of the amount, is not before us. The Tribunal has held that the amount is taxable. So far as the second question was concerned it was contended by the department before the Tribunal that the sum of Rs. 2 lakhs must be treated as income in the assessment year 1966-67, the relative accounting year being 1965-66 ending March 31, 1966. The Tribunal rejected the contention of the department holding that the waiver of the advance having taken place on 16th April, 1966, i.e., during the accounting year 1966-67, relevant to assessment year 1967-68, it could not be treated as income during the assessment year 1966-67. Aggrieved by the finding of the Tribunal, the department requested it to refer the above question for our opinion.

3. We do not think that there is any error in the finding recorded by the Tribunal. It is clear from the correspondence referred to in para. 4 of the order of the Tribunal that it was only on 16th April, 1966, that I. T. C. Ltd. agreed to waive the recovery of Rs. 2 lakhs which is the subject-matter of this case. The letters previous to the letter dated 16th April, 1966, which are dealt with by the Tribunal do not show that there was any firm commitment on the part of the I. T. C. Ltd. to waive any amount till 16th April, 1966. The income must, therefore, be treated as having accrued subsequent to the end of the accounting year 1965-66. It could not therefore be taxed as the income of the assessee for the previous year ending March 31, 1966. The view taken by the Tribunal has to be sustained. The question is, accordingly, answered in the affirmative and against the department. The assessee is entitled to costs. Advocate's fee is Rs. 250.


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