- (1.) As many as 19 questions have been raised in these appeals. The tribunal has more or less come to correct conclusions on most of the g questions. There are three questions which have been debated at some length before us. The questions are: "2.Whether the Appellate tribunal was justified in law in holding that in working out the amount deductible in terms of Rule 19-A (3 borrowed monies and debts due must mean borrowed monies and debts due payable 6. Whether the Appellate tribunal was justified in law in holding that the technical fees paid to M/s Warner Lambert Pharmaceutical Company of U. S. A. of Rs 51,264 and Rs 1,56,777 for the Assessment Years 1970-71 and 1971-72 respectively was revenue expenditure 12. Whether the tribunal erred in holding that the amount of tax recoverable as on the first day of the computation period was not to be included in the capital employed in the assessee's industrial undertaking as till the assessment was completed, the said amount did not constitute a debt due to the assessee -
(2.) So far as Question 6 is concerned, the amount is not very large. The assessment years involved are 1970-71 and 1971-72. Prima facie, the tribunal appears to be right. However, if the amount is not allowed as revenue expenditure, this will have to be treated as capital expenditure. The assessee may be entitled to depreciation on the capital assets. If the matter goes back to the Income Tax Officer then the consequence of non-allowance of this sum as revenue expenditure will have to be considered by the Income Tax Officer.
(3.) So far as Question 12 is concerned, the problem is whether the assessee is entitled to get any credit for the advance tax paid on the first day of the assessment year. The view taken by the High court is as under: "The assessee had claimed as assets and capital employed the amount representing the difference between advance tax already paid and the tax liability according to its books. The Income Tax Officer excluded this amount on the ground that till the assessment was completed, this could not be treated as a debt owed to the assessee, or an asset of the assessee. The appellate authority as well as the tribunal have also taken the same view. It is contended on behalf of the assessee that payments of advance tax are made pursuant to the estimates made in accordance with the books of the assessee. At the end of the accounting year when the balance-sheet is prepared, according to the books of the assessee, it is discovered that payments made towards advance tax are in excess of the tax liability. According to the books, the assessee is entitled to treat the difference, to which it is entitled by way of refund, as an asset. The authorities below have held that the right to refund will arise only after assessment is made and till then it cannot be treated as an asset of the assessee. Payment of advance tax is a statutory liability and maybe in accordance with the books of the assessee, it may result in a refund. But, till such time the assessment is completed and an order of refund is made, the assessee cannot treat the payment which has been made under a statutory obligation as its asset. Admittedly, the assessee cannot ask for refund of the said amount till the assessment is made, whether provisional or final. In such circumstances, the view taken by the tribunal is correct. The said amount can neither be said to be a debt due to the assessee nor an asset of the assessee. ";