Rajesh BALIA, J. - (1.) AT the time of admission of this appeal under s. 260A of the IT 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 Tribunal was justified by deleting the addition on account of expenses never incurred by the assessee since the marketing invariably was in the hand of McDowell Company ?
(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the deletion under s. 43B holding that such disallowance did not fall in the ambit. 2. So, far as question No. 1 is concerned, a like question has been the subject-matter of DB IT Appeal No. 7/2002; CIT vs. Udaipur Distillery Co. Ltd. [reported at (2003) 183 CTR (Raj) 614-- Ed.]; in the case of respondent-assessee himself relates to asst. yr. 1985-86. The appeal was filed by the CIT. The Tribunal has found that the amount of shared expenses paid to McDowell are not hit by the provisions of s. 37(3A) and 37(3B). The facts about the incurrence of such expenses are the same as in the present case. In the said appeal the Court found that the shared expenses in question did not fall within the ambit of s. 37(3A) r/w (3B). The Court said : "the AO as well as the CIT(A) have overlooked the basic premises that called for consideration is that assessee is sharing in lump sum proportionate expenses incurred by McDowells on total marketing infrastructure for sale of products of McDowells. Such expenditure includes expenditure on advertisement, publicity and sales promotion. The assessee is to pay a lump sum amount as his proportionate share in the expenses. It is a matter of accounting details between the parties to satisfy the mutual trust about accuracy of proportionate share of expenditure claimed by McDowells from the assessee, and assessee accepting that liability by debiting that sum in his books of account. So far as the assessee is concerned, it is not relevant for him to question as to what different component forms part of marketing expenditure as expenditure to be shared by him. It is under the terms of agreement, he has shared proportionate share to total expenditure incurred by the McDowells on various overheads. All expenses are primarily incurred on different counts by M/s McDowells. The assessee shares only the proportionate total expenditure determined as per the total amount spent by the McDowells. Therefore, from any angle, the finding of the Tribunal that the expenses do not form part of any of the activities included in sub-s. (3B) and, therefore, it is not subject to cl. (b) to Explanation is unexceptionable. Once the proportionate marketing expenses shared by assessee have been accepted as allowable expenses and the same being not part of the expenses related to advertisement, publicity and sales promotion, there was no warrant to enquire about exclusion or non-exclusion of the part of it with reference to the salary not paid by it but incurred by McDowell as a part of its overhead expenses with reference to ss. 37(3A) and (3B)." Following the aforesaid decision, we affirm the finding of the Tribunal in this regard. So far as question No. 2 about the liability incurred by the assessee towards the payment of bottling fee during the year in question is concerned, the Division Bench in D.B. IT Appeal No. 8/2002 [reported as CIT vs. Udaipur Distillery Co. Ltd. (2004) 186 CTR (Raj) 1--Ed.] has held that bottling fee is a consideration paid by the assessee and charged by the State for parting with its exclusive privilege of the State to deal in intoxicate alcohol meant for human in all its consumable manufacture which includes the bottling also for the purpose of marketing and is not in the nature of the duty, cess or fee in the technical sense of that terms. Liability incurred on account of bottling fee therefore, does not attract the provisions of s. 43B. Following the aforesaid decision, we hold that the liability of bottling fee incurred by the assessee for bottling Indian made foreign liquor during the previous year relevant to assessment year in question is not governed by the provision of s. 43B as the same is neither tax, duty, fees or cess but it is a consideration paid by the assessee for acquiring part of the State's exclusive privilege to deal in potable liquor. Accordingly, the appeal fails and is dismissed. No order as to costs.;