Commissioner of Income Tax vs Tamilnadu Dairy Development Corporation Ltd.

R. Jayasimha Babu, J.—The Tribunal has held that to the clarification regarding the scheme, with reference to which the assessee had

entered into an agreement with the Indian Dairy Corporation, here sought for during the accounting year 1975-76 and a reply was received on

April 2, 1976 ; that the scheme had commenced earlier in 1973 and the expenditure had been incurred on the scheme during the years ending with

March 31, 1974, March 31, 1975, and March 31, 1976 ; that the results of the entire project were rightly incorporated in the accounts of the

previous year ; and directed the assessments should be modified in accordance with the accounts of the assessee without excluding the project

costs of the financial years 1973-74 and 1974-75. The assessee was right in incorporating the expenditure in the year 1975-76 on receipt of the

letter from the Indian Dairy Corporation. The Tribunal has also noticed that it was only a matter of adjustment and the Assessing Officer could very

well have allowed the assessee to claim the expenditure for earlier years and that he had without doing so, wrongly denied to the assessee the

benefit of expenditure in the accounting year 1975-76. Thus, the Tribunal held against the Revenue. It was contended before us that each year is a

separate unit and the expenditure should have been claimed in the year in which it was incurred. As there was a doubt as to whether the

expenditure was incurred for the benefit of the Indian Dairy Corporation or for the benefit of the assessee, till the doubt was cleared it was not

possible for the assessee to make the claim. As the claim had been made in the year in which the clarification was answered, the Tribunal is

justified in the view taken by it.

Having regard to the said facts, we do not find any error in the order of the Tribunal. We, therefore, answer the question referred to us in favour

of the assessee and against the Revenue. No costs.