JUDGMENT
1. The Income-tax Appellate Tribunal has referred the following question of law for opinion of this court :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sum of Rs. 24,887 did not form the trading receipts and, therefore, was not assessable income of the assessee ?”
2. The assessee is a registered firm and derives income from commission agency and also from some business in its own account in the commodities, namely, sugar and arhar. The assessee filed a return declaring a total income of Rs. 1,09,181. On scrutiny, the Income-tax Officer found that the assessee had debited a sum of Rs. 24,887 in the anamat khata realised by it towards Mandi Samiti fee from the customers, and the Income-tax Officer thus included the said amount towards the income of the assessee. On appeal, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer. The assessee, thereafter, filed a second appeal before the Income-tax Appellate Tribunal. The Tribunal was of the view that since there is liability on the part of the assessee to pay mandi shulk as such the amount of Rs. 24,887 could not have been included in the income of the assessee. On the application of the Revenue, the Tribunal has referred the above question for opinion.
3. We have heard Sri Shekhar Srivastava, who appeared for the Revenue, and Sri Vikram Gulati, on behalf of the assessee. The question is as to whether the amount realised from the customer towards the mandi shulk although not spent by the assessee can be included in the income of the assessee. According to Rule 68 framed under the Krishi Utpadan Mandi Samiti Adhiniyam, the market fee is payable as soon as the commodity/ produce is brought within the market area. Further, according to Sub-rule 2(i) of the Rules, where the agricultural produce is sold through the commission agent or directly to the trader, the commission agent or the trader as the case may be, shall charge the same from the seller and deposit it with the Market Committee in accordance with the directions of the committee in this behalf. In view of this provision, it is the liability of the assessee to charge the market fee from the customer and pay the same to the Mandi Samiti. An identical question came up for consideration before a Bench of this court in the case of CIT v. Poonam Chand Trilok Chand [1976] 105 ITR 618, wherein it was held that an assessee who followed the mercantile system of accounting, as the assessee was doing, is entitled to claim a deduction even though the expenditure is not actually Inclined. It is enought if the liability for such expenditure accrues. The fact that the assessee did not pay the amount to the Government in the relevant accounting year did not alter the position. Following the decision we are of the view that the amount of Rs. 24,887 received by the petitioner towards mandi shulk shall mean for discharging his liability to pay the mandi shulk to the Mandi Samiti and as such the said amount could not have been included in the income of the assessee. In view of the above, we answer the question in the affirmative and against the Revenue. There shall be no order as to costs.