BALIA, J. - (1.) HEARD learned counsel for the parties.
(2.) THIS appeal relates to the Assessment Year 1985-86. The order under appeal is a composite order passed on 27. 6. 2001 in nine appeals by the Income Tax Appellate Tribunal, in respect of the Assessment Year 1985-86. According to Revenue-appellant, following two substantial questions of law arises in this appeal :- (01) Whether on the facts and in the circumstances of the case the ITAT was justified in law in holding that the salary amounting to Rs. 29,80,610/- will not fall within the ambit of Section 37 (3a) read with Section 37 (3b) even though the same was not paid to the employees of the assessee, overlooking the provisions of clause (b) of explanation appended to Section 37 (3b) of the Income-Tax Act ? (02) Whether on the facts and circumstances of the case, the ITAT was justified in Law in holding that interest once granted U/s. 244 (1a) cannot be withdrawn subsequently ? So far as question No. 2 is concerned, the decision of the Tribunal is based on a judgment of Gujrat High Court in Cibatul Ltd. vs. IAC (1 ). The appeal against which has been dismissed by the Hon'ble Supreme Court. Reference in this connection may be made to 203 ITR (ST) 23 (S. C. ). That case relates to the question whether the Assessing Officer is empowered to withdraw interest granted under Section 244 (1a) of the Act. That question has been answered against the Revenue. Since the decision of Gujrat High Court in favour of the assessee has been affirmed by the Hon'ble Supreme Court, which amounts to declaration of law setting any controversy about the issue, it cannot be said that the question No. 2 any more remain a substantial question of law arising for consideration in this appeal. It stands answered by aforesaid decision of Hon'ble Supreme Court. So far as the first question is concerned, in our opinion on the accepted premises by the parties, it is also misconceived.
(3.) AS per the learned counsel for the appellant Rs. 29,80,610/- , which has been shown as salaries forming part of the `marketing expenditure' incurred by M/s. Mc Dowell Limited and debited to the assessee's account as his share of marketing expenditure, which has been transacting Indian made foreign liquor (IMFL) manufactured by Mc Dowells is not allowable, on a conjoint reading of sub-section 3a and 3b of Section 37 of the Act. The contention raised by the learned counsel for the appellant is that part of this amount represents the amount spent on salaries of Mc Dowells employees. However, salary has been paid actually by Mc Dowells to its employees and this amount has not been incurred by the assessee as salary payable to its own employees. Therefore, in view of specific provision contained in clause (b) of the explanation appended to sub-section 3a and sub- section 3b of Section 37 of the Act, the assessee is not entitled to claim such deduction on account of salary to the employees who are engaged with Mc Dowells. On the other hand it was urged by learned counsel for the respondents that the amount of expenses debited to profit and loss account of the assessee as its share of marketing are not of any category inhibited by sub-section 3a and 3b of Section 37 of the Act is a fact which has been accepted by the Revenue and which is not disputed. The assessee's share in expenses relating to category mention in Section 37 (3b) have also been separately dealt with by the Revenue. That being so, every part of expenses relating to general marketing infra-structure and not any part of expenses envisaged under Section 37 (3b) are allowed in full, unless it could be said that the same are not actually incurred. In no circumstances any part of expenses forming part of market expenditure in question cannot be disallowed or reduced by invoking sub-sections (3a) and (3b) of Section 37 of the Act. It was also urged that, what the assessee has incurred by way of marketing expenditure is one consolidated sum debited to Mc Dowells Company. It has not incurred expenses on separate heads e. g. since no part of expenses in question were spent by way of payment of salaries by the assessee to its employees. The details furnished by Mc Dowells is only to justify and verify the amount of share demanded from assessee as his share of total marketing expenditure. ;