- (1.) THE Income Tax Appellate Tribunal, New Delhi has referred to following question of law under section 256(2) of the Income Tax Act, 1961, (hereinafter referred to as 'the Act') for opinion of this court. 'Whether on the facts and in the circumstances of the case and despite the provisions of Explanation below clause (a) of sub -section (1) of section 44AC of the Income Tax Act, the I.T.A.T. is legally correct in holding that 'Nirgam Mulya' of Rs. 36,52,952 paid by the assessee could not be included in 'purchase price' for computing the profit under section 44AC of the Income Tax Act ?'
(2.) THE present reference relates to the assessment year 1991 -92. Briefly stated, the facts giving rise to the present reference are as follows: Assessee, a liquor contractor filed return for the assessment year 1991 -92 declaring an income of Rs. 5,51,504. Invoking the provisions of section 44AC of the Income Tax Act, 1961 the assessing officer completed the assessment. The assessee had paid an amount of Rs. 5,76,222 for purchase of liquor, Rs. 7,45,684 for packing material (capsuling charges) and Rs. 81,82,860 for Bid -money, which in turn included a sum of Rs. 36,52,952 being the Nirgam Mulya. In view of the provisions of Explanation below clause (a) of section 44AC the assessing officer quantified the purchase price as under: Purchase of liquor Rs. 5,76,222 Capsuling charges Rs. 7,45,684 Nirgam Mulya Rs. 36,52,952 Rs. 49,74,858 By applying a rate of 40 per cent as provided in section 44AC the assessing officer computed a profit of Rs. 19,89,943 and the assessment was completed on total income of Rs. 20,08,030.
(3.) AGGRIEVED with the above decision of the assessing officer, the assessee filed an appeal before the Commissioner (Appeals) in which he mainly referred to the amendment made by the U.P. Government in rule 2 of the U.P. Settlement of Country Liquor (Tender - cum -Auction) Rules by Ordinance No.83(2)XVV -V -12(KA) 1991 of 10 -1 -1991, according to which the Nirgam Mulya forms part of Bid money. On the basis of this amendment, it was contended by the assessee that Nirgam Mulya could not be considered as part of purchase price. The learned Commissioner (Appeals) dismissed the assessee's appeal and confirmed the assessing officer's order.;