1. G. S. SINGHVI, J.---These four petitions have been filed by the Revenue under section 256(2) of the Income Tax Act, 1961, for directing the Income-tax Appellate Tribunal, Chandigarh Bench.
2. Chandigarh to refer the question of law, which according to the petitioner, arises in these cases.
3. Although these petitions related to different assessment years, the facts of all these petitions and the issues raised therein are identical and in view of this we are deciding them by a common order, Shri R. P. Savhney, learned senior counsel appearing for the Revenue, argued that as the assessee had not paid the amount of purchase tax, .It was- not entitled to claim exemption on the basis of notional figures of purchase tax. Shri Sawhney submitted that the competent Authority constituted under the Punjab General Sales Tax Act, 1948, had not made assessment of the purchase tax and, therefore, the petitioner was not entitled to claim any relief and the Commissioner of Income-tax (Appeals) as well as the Tribunal committed serious illegality in accepting the claim of the petitioner with reference to purchase tax. He relied on CIT v. Guranditta Mal Shanti Parkash Zira (1987) 164 ITR 774 (P&H); CIT v: Ashok Iron and Steel Rolling Mill (1993) 199 ITR 815 (All and Peico Electronics and Electrical Ltd. v. CIT (1993) 201 ITR 477 (Cal. j. On the other hand Shri M. R. Sharma argued that the principles laid down by this Court inn Sirsa Industries v. CIT (1989) 178 ITR 437 have been correctly applied by the Commissioner of Income-tax (Appeals) and the Tribunal and no question of law arises for adjudication by this Court.
4. "An assessee who follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains, were being computed. It can again not be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date."
5. While rejecting the argument that the assessee had not debited the liability in its books of account, their Lordships of the Supreme Court further observed (page 367): "We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law, the deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred for being allowed that deduction. Whether the assessee is entitled to a particular deduction or trot will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs.1,49,776 being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. "
6. "We have closely read both the decisions of the Supreme Court and are of the opinion that while in Kedamath Jute Manufacturing Co. Ltd. v. CIT (1971) 82 ITR 363, the manner of keeping mercantile system of accounting and claim of deduction of sales tax from the profits without making actual payments, was allowed such a point did not directly arise in Chowringhee Sales Bureau's case (1973) 87 ITR 542. In Chowringhee. Sales Bureaus case (1973) 87 ITR 542, the sole point for consideration was whether an auctioneer would be a dealer within the meaning of the Bengal Finance (Sales Tax) Act; 1941. In the Sale of Goods Act, 1930, an auctioneer is neither the seller nor the buyer and is merely a commission agent. In an earlier decision (See (1969) 71 ITR 131), the Calcutta High Court had declared the provision whereby an auctioneer was made liable to sales tax, as ultra vires and, therefore, the precise question before the Supreme Court was whether the decision of the Calcutta High Court declaring the provision to be ultra vires was right or wrong and it did not agree with the Calcutta High Court and held that it was within the competence of the State Legislature to include within -the definition of the word 'dealer' an auctioneer who carries on the business of selling goods and who has, in the customary course of business, authority to sell goods belonging to the principal and, therefore, concluded that in law he was liable to pay sales tax and the sales tax received by him formed part of the trading or business receipts. The point whether the assessee was right in claiming deduction in the year in which liability to pay tax accrued or whether he was entitled to claim deduction in the year in which the amount was actually paid on the basis of its manner of maintaining accounts, did not directly arise. In spite of the point not having directly arisen, the following sentence was added: 'The party would, of course, be entitled to claim deduction of the amount as and when it passes it on to the State Government.'
7. The aforesaid sentence was considered by the Single Judge as if a Bench of three Judges had taken a view contrary to the decision of the two Judges in Kedarnath Jute Manufacturing Co. Ltd. v.
8. CIT (1971) 82 ITR 363 (SC). The author who prepared tire headnote of the Income-tax Reports had treated the aforesaid sentence as per incuriam. We are of the view that the aforesaid sentence is a surplusage. In a later decision in Chowringhee Sales Bureau v. CIT (1977) 110 ITR 385, by the Calcutta High Court, the precise question, which is before us, arose relating to the same assessee, namely, Chowringhee Sales Bureau (P.) Ltd., who was also before the Supreme Court in (1973)87 ITR 542. In Chowringhee Sales Bureau (P.) Ltd.'s case (1977) 110 ITR 385, for two later assessment years, Chowringhee Sales Bureau (P.) Ltd. Collected - certain amounts as sales tax and deduction was claimed on the basis of accrual of liability for maintaining the mercantile system of accounting, although the amount had not been paid to the sales tax authorities. Up to the Tribunal, the assessee failed but succeeded before the Calcutta High Court. The relevant headnote of the I.T.R. Is as follows: 'That the amounts collected by the assessee as gales tax formed part of its trading receipts.
9. However, the liability to pay sales tax arises the moment a sale or purchase is effected and an assessee who maintains accounts on the mercantile system is entitled to deduction of his estimated liability. To sales tax, even though they had not been paid to the sales tax authorities.'
10. For the reasons mentioned above, we hold that no question, of law arises for determination by this Court. Consequently, these petitions are dismissed.