HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Excess Profit Tax, Kanpur v. Kalyan Mal Phool Chand
Civil Appeal No. 1375 of 1974
[1987] 2 SCR 601 ·
Excess Profits Tax Act, 1940: sections 2, 4, 5, 6, 7, 7A and 21 · Indian Income-tax Act, 1922: section 13
Sources & disclosures includedDownload original judgment / order
2-judge bench; unanimous judgment delivered by Sabyasachi Mukharji, J. · Sabyasachi Mukharji, J. · S. Natarajan, J.
Assessment years: Chargeable accounting period 1 April 1943 to 31 March 1944
01 · Facts of the case
The firm manufactured katechu in Nepal in periods without sales and sold it later in Kanpur. It sought to allocate later profit backward to manufacture periods, create deficiencies there and set them off against excess profits for 1943-44 (SCR pp.601-609; PDF pp.1-9).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Excess-profits computation followed annual income-tax principles. A receipt belongs to the period in which the right to receive accrued; earlier work does not shift later-accrued profit backward. Manufacturing and selling elements may be apportioned within one year but not across accounting periods to manufacture a deficiency (SCR pp.610-614; PDF pp.10-14).
Source: Primary judgment: discussion
03 · Judicial decision
The appeal was allowed, the High Court judgment set aside and the reference answered in the negative, with parties bearing their own costs (SCR p.615; PDF p.15).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue on final merits (SCR p.615; PDF p.15).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: economic contribution to a later profit is not legal accrual in the earlier period. Verify the statutory computation period and when the right to receive arose before claiming a cross-period set-off (based on SCR pp.613-615; PDF pp.13-15).
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The Excess Profits Tax Act was a historical wartime enactment; the precise set-off rule is not represented as current law.
Later treatment
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