BALIA, J. - (1.) AT the time of the admission of this appeal under Section 260-A of the Income-Tax Act, 1961, the substantial questions involved in this appeal were framed as under:- (1) "whether on the facts and in the circumstances of the case the I. T. A. T. was justified in holding that the unpaid amount of bottling fee has, no furnishing of the bank guarantee, to be treated as actual payment and accordingly allowing the deduction in respect of the same u/s. 43-B of the Act, even through the sum has not been actually paid before the due date of filing the return u/s. 139 (1) of the Act. " (2) "whether on the facts and in the circumstances of the case the I. T. A. T. was justified in allowing the depreciation on Research & Development assets which related to the closed business of Fast Food Division/unit of the assessee company as such not used during the previous year?" (3) "whether on the facts and in the circumstances of the case, the I. T. A. T. was justified in deleting the addition of Rs. 2,77,887/- being made treating the expenditure incurred in purchase of new transformer as capital expenditure even when the old transformer still exists in the block of asset and not sold, discarded or demolished or destroyed?"
(2.) THE question No. 1 dwells on the claim of assessee - respondent for deduction of amount of bottling fee payable under the Rajasthan Excise Act, 1950 and relevant Rules framed thereunder, liability for which was incurred during the accounting period relevant to Assessment Year 1992-93, claim was made on the basis of accounts maintained on mercantile system. During the course of hearing, it transpired that the claim of deduction on account of liability incurred for paying bottling fee during accounting period relevant to the assessment year 1992-93, which is subject matter of this appeal, has been sought to be denied on the ground that it being a fee, unless it is actually paid, when it is payable, deduction in respect thereof cannot be allowed during the relevant assessment year when the liability was outstanding. for this purpose, the Assessing Officer drew support from the provisions of Section 43b of the Act of 1961 as it existed with effect from 1. 4. 89. Two-fold contentions were raised in support of claim of deduction before the Tribunal on behalf of assessee: firstly that bottling fee is not a fee in its technical sense as an impost and part of taxation scheme, but is a consideration receivable by the State for parting with its exclusive privilege to deal in potable liquor in all its manifestations and the same does not fall within the purview of Section 43 B. Such liability which is of revenue in nature is allowable as deduction when such liability is incurred irrespective of its payment on due date. Alternatively, it was also urged that since the assessee was required to furnish bank guarantee, in a pending litigation wherein the validity of liability was under challenge, the bank guarantee must be deemed to be actual payment so as to satisfy the condition of Section 43b. But the Tribunal has decided the issue in favour of assessee on the latter contention and the first contention of the assessee has not been answered notwithstanding it was raised before the Tribunal. Under such circumstances, the assessee urged before us that even if the question No. 1 is decided against him, he is entitled to relief on second contention raised by him. The second contention raised by him also raises substantial questions of law which goes to the root of the controversy and arises out of the Tribunal's order. The assessee is entitled to seek sustaining of Tribunal's order on the alternative ground which was urged before the Tribunal but was not decided by it.
(3.) IN the facts and circumstances of the case we are satisfied that following substantial question of law also arises in this appeal for consideration and it is required to be decided for deciding the appeal on merits on the contentions raised by the parties before the Tribunal as well as before us:- (1a) : "whether in the facts and circumstances of the case bottling fees chargeable from the assessee under the Rules framed under the Rajasthan Excise Act, 1950 and interest chargeable on late payment of bottling fees, amounts to tax, duty cess or fees within the meaning of Section 43b of I. T. Act, 1961 so as to attract the said provisions while considering allowability of deduction of such expenses. " In D. B. Income Tax Appeal No. 8/2002 - CIT vs. Udaipur Distillary Company Limited, the respondent-assessee in this case also, in which same issues were raised in respect of assessment year 1988-89, this court vide its judgment dated 03. 09. 2003 has answered the question No. 1 holding that furnishing of bank guarantee cannot be treated equivalent to actual payment. Therefore, if the bottling fee is to be considered as "fee" in its technical sense, requirement of Section 43b are not fulfilled. However, on newly framed question this Court has decided that looking to the nature of charges and provision of levy of taxation scheme under Article 265 and provisions of Rajasthan Excise Act, 1950, and after considering number of decision of Hon'ble Supreme Court bottling fee is not a fee in its technical sense as part of taxation, but is a consideration for parting with exclusive privilege of State to deal in potable liquor founded on right of State to enter into contract in its exclusive right to trade and deal in potable alcohol and intoxicants, therefore, question was decided in favour of assessee and claim of assessee to deduction was found to be not falling within the ambit of Section 43-B of the I. T. Act. It has to be considered as allowable revenue expenditure, if the accounts are maintained on mercantile basis, in the year when such liability has arisen. ;