Ajit K.SenguPta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment years 1977-78, 1979-80 and 1980-81, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the amounts of Rs. 1,00,45,592, Rs. 45,22,346 and Rs. 4,23,706 were deductible on account of excise duty liability for the assessment years 1977-78, 1979-80 and 1980-81?"
(2.) The brief facts are that the assessee-company claimed deduction of Rs. 3,11,62,220, Rs. 45,22,346 and Rs. 1,05,20,682 for the assessment years 1977-78, 1979-80 and 1980-81, respectively, as excise duty liability on the basis of a show-cause notice dated December 9, 1976. The Income-tax Officer found that the notice dated December 9, 1976, was a mere show-cause notice and it did not create any liability. The Income-tax Officer also found that a Civil Rule No. 8372(C) of 1978 was pending before the High Court and, as per the order of the High Court, the Central Excise authority was then restrained from levying any such duty pending disposal of the rule. The Income-tax Officer, therefore, held that no liability in respect of Central Excise duty accrued or arose in the previous year. Hence, he disallowed the claim of the assessee for all the three assessment years.
(3.) The assessee, being aggrieved by the order of the Income-tax Officer, agitated the dispute before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), after hearing the contentions of the assessee, held that the assessee-company was entitled to deduction of Rs. 1,00,45,592, Rs. 45,22,346 and Rs. 4,23,706 for the assessment years 1977-78, 1979-80 and 1980-81, respectively, on account of excise duty liability in respect of the goods manufactured by the assessee-company during the relevant accounting periods.;