THE COMMISSIONER OF INCOME-TAX, MADHYAPRADESH, NAGPUR vs SWADESHI COTTON AND FLOUR MILLS

The Supreme Court held that under Section 10(2)(x) of the Indian Income-tax Act, 1922, a liability for profit bonus is incurred only when the claim is settled, either amicably or through industrial adjudication. In this case, since the bonus for 1947 was settled by an award in 1949, the liability was properly attributable to the year 1949, not 1947. The Court also ruled that the system of reopening accounts was not applicable under the Act, affirming the decision of the Appellate Tribunal.