I.P. Mukerji, J. - (1.) This is an appeal under Section 260A of the Income Tax Act, 1961.
(2.) On 23rd December, 2010 the Division Bench of this Court presided over by Mr. Justice K. J. Sengupta admitted this appeal on the following substantial questions of law relating to the assessment year 1998-99 of the assessee: i) "Whether the Tribunal erred in declining to allow the depreciation in the sum of Rs.32,64,692/- in entirety in respect of the long-term leasehold properties including the one for perpetuity and restricting the depreciation only with regard to capital expenditure for any structure by way of addition and/or alteration ? ii) Whether on the facts and in the circumstances of the case the Tribunal erred in affirming the disallowance of Rs.1,31,002/- being the liabilities for business expenditure on the ground that they relate to earlier previous year, even when the assessee undeniably received the relevant bills during the next previous year relevant to instant assessment year? iii) Whether the Tribunal should have held that the Reserve Bank of India's regulatory Directions requiring investment of the assessee's surplus fund in securities, stocks, specified bonds etc. as the 2 precondition for the licence to carry on the business as a Residuary Non-banking Financial Company rule out the part disallowance of business expenditure by ad hoc estimate at Rs.8,86,266/- under Section 14A of the I.T. Act deeming it as incurred in relation to earning exempt dividend income and further that the Proviso to that section precludes such disallowance of expenditure? iv)Whether the Tribunal should have held that the assessee's plea for a direction for alternative relief to the extent of the deferred liability for excess collection of processing charges in the sum of Rs.325,15,18,102/- debited in the yearly account of instant year is legitimate and necessary to meet the contingency in the event of success of the Revenue's appeal under Section 260A of the Act and reversal of the Tribunal's order allowing the cumulative liability of Rs.613.20 crore on that account for assessment year 1996-97 instead of spread over?"
(3.) Mr. Abhijit Chatterjee learned Senior Advocate appearing for the appellant assessee, at the outset, stated that he was not pressing questions i) and iv). In question ii), the case of the assessee simplified is that they claimed business expenditure of Rs.1,31,002/- for a particular previous year. The contention of the revenue was that this expenditure was incurred the year previous to that. The assessee's reply was that they received the bills and made payments for them in the following previous year which was relevant to the assessment year in question.;