| Case ID |
ffe779d2-4472-44d4-9224-1b7449be72d8 |
| Body |
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| Case Number |
IT REFERENCE No. 519 OF 1976 |
| Decision Date |
Nov 30, 1979 |
| Hearing Date |
|
| Decision |
The Allahabad High Court held that the Income-tax Appellate Tribunal was not justified in allowing the claim of Rs. 71,648 as a loss incidental to trade in the assessment year 1969-70. The court emphasized that deductions could only be allowed for expenses and losses incurred in the relevant accounting year. In this case, the claim was based on a mistake in passing entries in the books for the assessment year 1967-68, and such a mistake could not be corrected by reversing entries in the assessment year 1969-70. Therefore, the claim was not allowable either as a bad debt or a trading loss. |
| Summary |
This case involved the Commissioner of Income Tax and the Indian Turpentine & Rosin Co. Ltd., where the key issue was whether a claimed business loss could be justified under section 28(i) of the Income-tax Act, 1961. The assessee, engaged in manufacturing and selling rosin and turpentine, had dispatched goods to a customer in the assessment year 1966-67. The customer declined delivery, resulting in the goods being sold through an agent in the next accounting year. The assessee claimed a deduction for a mistake in accounting entries, which the Income Tax Officer and the Appellate Assistant Commissioner disallowed. However, the tribunal allowed it as a business loss incidental to trade. The Allahabad High Court overturned this decision, stating that the loss was not incurred in the relevant accounting year and thus could not be allowed. This case highlights the importance of accurate accounting and the strict interpretation of tax laws concerning business losses and deductions. The decision is significant for businesses and tax professionals dealing with similar issues of accounting errors and the timing of deductions. Keywords such as 'business loss', 'income-tax deduction', 'accounting errors', and 'tax compliance' are relevant in this context. |
| Court |
Allahabad High Court
|
| Entities Involved |
Commissioner of Income Tax,
Indian Turpentine & Rosin Co. Ltd.,
M/s. Mandya Paper Mills, Madras
|
| Judges |
C.S.P. Singh,
R.R. Rastogi
|
| Lawyers |
R.K. Gulati,
A. Gupta,
J. Swarup,
V. Swaru
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Indian Turpentine & Rosin Co. Ltd.
|
| Citations |
1980 SLD 1070,
(1980) 124 ITR 830
|
| Other Citations |
Associated Banking Corpn. of India Ltd. v. CIT [1965] 56 ITR 1 (SC),
U.P. Vanaspati Agency v. CIT [1968] 68 ITR 120 (All.),
Devi Films (P.) Ltd. v. CIT [1970] 75 ITR 301 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i)
|