COMMISSIONER OF INCOME TAX v. VARIETY HOSIERY MILLS - 1985-LL-1129-5

Citation	1985-LL-1129-5
Appellant Name	COMMISSIONER OF INCOME TAX
Respondent Name	VARIETY HOSIERY MILLS
Court	ITAT
Relevant Act	Income-tax
Date of Order	29/11/1985
Assessment Year	1976-77
Judgment	View Judgment
Keyword Tags	reference application • accounting method • import licence • actual sale
Bot Summary:	27th June, 1985 in I. T. A. No. 648-chandi/84, to the High Court: Whether on the facts and in the circumstances of the case, the Tribunal w a s right in law in confirming the order of the AAC allowing inclusion of anticipated profits for assessment on release orders and import licences in the absence of actual sale of goods and against any recognised system of accounting Inasmuch as, in our opinion, the above said question does not call for reference, we are unable to accept the request of the concerned CIT for the following reasons. All through in the past years, the assessee had been showing expected profit on value of release and import licences from year and on actual profit having been received subsequently through adjustments. Return was made for the year under reference on the same basis. When the Revenue came in appeal before the Tribunal it, after perusing the paper-book placed on the assessee s compilation, observed that right from 1971-72 to 1976-77 method adopted by the assessee for exclusion of expected profit for import licence was the same as during the year under consideration. For the reason given by the AAC in his order, i. e. on the basis of consistency of accounting method adopted by the assessee year after year. Counsel for the assessee, on the one hand, and by us, on the other hand, we find that year after year profits were disclosed on the same basis, i. e. for the first year anticipated profit was shown and in the second year when actual profit was known, adjustment was allowed either by application or adding the difference. Counsel for the assessee submitted at the time of hearing of this application that for the year 1974-75 identical addition was proposed to be made by the ITO but the IAC under s. 144B proceedings accepting the consistency of accounting method adopted by the assessee, ordered the deletion of the same and he placed on record copy of directions under s. 144B issued by the IAC. Strangely enough, the addition proposed by the ITO on the basis of consistency of accounting method was ordered to be deleted by the then IAC, who subsequently became CIT and strangely enough, for the reasons best known to him, he preferred a question for reference under s. 256, which apparently is misconceived and not referable.

F. C. RUSTAGI, J. M.: CIT vide this application under s. 256 (1) has requested ITAT to refer following question, said to be question of law, arising out of its order dt. 27th June, 1985 in I. T. A. No. 648-chandi/84, to High Court: "Whether on facts and in circumstances of case, Tribunal w s right in law in confirming order of AAC allowing inclusion of anticipated profits for assessment on release orders and import licences in absence of actual sale of goods and against any recognised system of accounting?" Inasmuch as, in our opinion, above said question does not call for reference, we are unable to accept request of concerned CIT for following reasons. assessment year under reference is 1976-77. All through in past years, assessee had been showing expected profit on value of release and import licences from year and on actual profit having been received subsequently through adjustments. Return was made for year under reference on same basis. assessee s contention was not accepted by ITO but when matter came before AAC, he accepted same. When Revenue came in appeal before Tribunal it, after perusing paper-book placed on assessee s compilation, observed that right from 1971-72 to 1976-77 method adopted by assessee for exclusion of expected profit for import licence was same as during year under consideration. Therefore, for reason given by AAC in his order, i. e. on basis of consistency of accounting method adopted by assessee year after year. Tribunal confirmed finding of AAC. At time of hearing of this reference application, ld. Senior Departmental Representative Mr. R. K. Bali was exclaimed to support that and submitted that anticipated profit on any business could be no basis. But when paperbook which was placed at time of hearing was perused by ld. senior Departmental Representative with assistance of ld. counsel for assessee, on one hand, and by us, on other hand, we find that year after year profits were disclosed on same basis, i. e. for first year anticipated profit was shown and in second year when actual profit was known, adjustment was allowed either by application or adding difference. So much so, ld. counsel for assessee submitted at time of hearing of this application that for year 1974-75 identical addition was proposed to be made by ITO but IAC under s. 144B proceedings accepting consistency of accounting method adopted by assessee, ordered deletion of same and he placed on record copy of directions under s. 144B issued by IAC. Strangely enough, addition proposed by ITO on basis of consistency of accounting method was ordered to be deleted by then IAC, who subsequently became CIT and strangely enough, for reasons best known to him, he preferred question for reference under s. 256 (1), which apparently is misconceived and not referable. request of concerned CIT is, therefore, rejected. Reference application is dismissed. *** COMMISSIONER OF INCOME TAX v. VARIETY HOSIERY MILLS

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