Cit Vs. Auto Sales - Court Judgment

Excerpt:
in the allahabad high court sudir narain & d.p. gupta, jj. - land acquisition act, 1894 [c.a. no. 1/1894]. section 4; [sushil harkauli, s.k. singh & krishna murari, jj] acquisition of land held, court cannot issue a writ of mandamus directing the state authorities to acquire a particular land. land acquisition is not purely ministerial act to be performed by executive no direction in nature of mandamus whether interim or final can be issued by court under article 226 necessarily to acquire particular land in public interest. land acquisition is not a purely ministerial act to be performed by the executive and therefore, no mandamus can be issued by the court in exercise of its power under article 226 of the constitution, whether suo motu or otherwise, whether in public interest litigation or otherwise directing acquisition of land under the provisions of land acquisition act, 1894. it would, however, be open to the court in exercise of that power to invite the attention of the executive to any public purpose and the need for land for meeting that public purpose and to require the executive to take a decision, even a reasoned decision, with regard to the same in accordance with the statutory provisions, perhaps even within a reasonable time frame. however, the power of the court under article 226 must necessarily stop at that. thereafter, if the decision taken by the executive is capable of challenge and, there exist appropriate legal grounds for such challenge, it may also be open to the court to quash the decision and to require reconsideration. but no direction in the nature of mandamus whether interim or final can be issued by the court under article 226 to the executive to necessarily acquire a particular area of a particular piece of land for a particular public purpose. section 4; compulsory acquisition of land powers of state government held, renewal of lease in favour of petitioners would not take away power of state government of compulsory acquisition of land. renewal of lease would at best be taken into consideration for determining quantum of compensation. orderthe following question has been referred to this court by the appellate tribunal :'whether, on the facts and in the circumstances of the case, the tribunal was lawful to hold that transaction by book entries are not genuine transactions and, therefore, interest payment on debit as a result of such transactions are not allowable as deduction expenditure specially in absence of any such observation of finding by the income tax officer to this effect ?'2. the tribunal, in respect of the question arising out of the order dated 6-11-1982 referred to it, had relied upon a decision for the assessment year 1971-72 for holding that the amount of rs. 2,59,873 realised by the assessee for the accounting year 1970-71 did not constitute the trading receipts. the said decision was upheld by this court in cit v. auto sales : [2000]246itr494(all) , wherein it was held that where the assessee was a dealer of motor vehicles and sold the same on hire purchase basis in which system there was no immediate sale of the vehicle at the time of the delivery of the same to the prospective buyers but the ultimate sale was effected after the instalments of hire were cleared, for the receipt of the amount by the assessee before such final sale was effected, there was no liability towards the sales tax. the liability arose only when the sale was actually made and since that event was uncertain and in the absence of evidence that amounts were received as part of the price for which goods were supplied, the excess amount that was left on the conclusion of the transaction and transferred to the sundry creditors account alone was taxable.3. in view of the said decision the question referred to above is decided in the affirmative.4. the reference application is accordingly disposed of finally.

Judgment:
ORDER

The following question has been referred to this court by the Appellate Tribunal :

'Whether, on the facts and in the circumstances of the case, the Tribunal was lawful to hold that transaction by book entries are not genuine transactions and, therefore, interest payment on debit as a result of such transactions are not allowable as deduction expenditure specially in absence of any such observation of finding by the Income Tax Officer to this effect ?'

2. The Tribunal, in respect of the question arising out of the order dated 6-11-1982 referred to it, had relied upon a decision for the assessment year 1971-72 for holding that the amount of Rs. 2,59,873 realised by the assessee for the accounting year 1970-71 did not constitute the trading receipts. The said decision was upheld by this court in CIT v. Auto Sales : [2000]246ITR494(All) , wherein it was held that where the assessee was a dealer of motor vehicles and sold the same on hire purchase basis in which system there was no immediate sale of the vehicle at the time of the delivery of the same to the prospective buyers but the ultimate sale was effected after the instalments of hire were cleared, for the receipt of the amount by the assessee before such final sale was effected, there was no liability towards the sales tax. The liability arose only when the sale was actually made and since that event was uncertain and in the absence of evidence that amounts were received as part of the price for which goods were supplied, the excess amount that was left on the conclusion of the transaction and transferred to the sundry creditors account alone was taxable.

3. In view of the said decision the question referred to above is decided in the affirmative.

4. The reference application is accordingly disposed of finally.