ASSAM ROLLER FLOUR MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, "the Tribunal"), has referred under Section 256(1) of the Income-tax Act, 1961 (for short, "the Act"), to this court for its opinion the following questions, viz :

(2.) WHETHER, on the facts and in the circumstances of the case, the above said amount of penalty of Rs. 4 lakhs, imposed by the Collector of Customs, even when the imports were bona fide and in conformity with the policy of the Government and the provisions of law, as found by the revisional authority under the Customs Act, 1962, is necessary expense of the business ? And whether the said expenditure is a liability deductible from the income of the assessee of that year and incurred in that year, i.e., ending March 31, 1979, relevant to the assessment year 1979-80, even though the assessee has maintained account books on the mercantile basis ?

(3.) THE general Rule is that deduction can be permitted in respect of only those expenses or losses which have accrued in the relevant accounting year. This general Rule, however, is required to be applied after taking into account such subsequent events which have a bearing on the issue being decided by the authority concerned. It is, therefore, permissible in law to take into consideration, at the time of deciding an issue, such subsequent event, legal or factual, which may have an effect on the decision of the issue. It is necessary to do so for the obvious reason that the aim of law is to do substantial justice between the parties and to impart to them not merely legal or technical justice but, as far as possible, real and substantial justice. Justice is to be imparted in accordance with law and not simply in subordination to law. THE former expression promotes and advances expansion and development of law; the latter makes law, rather, stagnant and static. A developing society needs developing legal notions.