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TMI Blog2005 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Tribunal is right in law and on facts in directing the Income-tax Officer to allow deduction of Rs. 7,64,769 as statutory liability of luxury tax collected by the assessee?" The assessee-company runs a hotel. For the assessment year 1983-84, the accounting period is the financial year ended on March 31,1983. It was originally assessed under section 143(3) of the Act on a total income of Rs. 17,36,262. The Commissioner of Income-tax initiated action under section 263 of the Act, as according to him, an amount of Rs. 7,64,769 being the luxury tax recovered by the assessee from its customers had not been included in the total receipts by the assessee. The order of the Commissioner of Income-tax was challenged by way of appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate for the respondent-assessee, supported the order of the Tribunal stating that the liability in question was a statutory liability and whether the same was discharged or not, regardless of the dispute raised by the assessee, the assessee was entitled to deduction in the light of the system of accounting regularly employed by the assessee. The Tribunal has come to the conclusion that, despite the pendency of the litigation challenging the validity of the statute imposing the luxury tax, the amounts collected by the assessee from various customers represented the trading receipts of the assessee and were liable to be brought to tax. Once this is the position, the corresponding liability that the assessee was called upon to discharge by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Manufacturing Co. Ltd. v. CIT [1971] 82 ITR 363, to hold that the liability being statutory in nature, was deductible on the basis of the system of accounting regularly employed by the assessee. Therefore, the question referred for the assessment year 1983-84 at the instance of the Revenue is answered in the affirmative. The Tribunal was right in law in directing the Assessing Officer to allow deduction of Rs. 7,64,769 as statutory liability of luxury tax collected by the assessee. The question is accordingly answered in favour of the assessee and against the Revenue. For the assessment year 1984-85, the following two questions have been referred at the instance of the Revenue. R.A. No. 471/Ahd of 1992: "(1) Whether the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT v. Nutan Mills Ltd. [2002] 254 ITR 519 in Income-tax Reference No. 54 of 1988, dated February 6, 2001, it has been laid down that, while applying the provisions of rule 6D of the Income-tax Rules, 1962, actual expenditure incurred on each trip has to be ascertained and it is not permissible to apply the provision with reference to totality of the trips made by an individual employee. Applying the ratio to the facts found by the Tribunal, it is apparent that the Tribunal committed an error in holding that the limit prescribed in rule 6D of the Rules should not be applied to each tour individually, but to all tours made during the relevant year consolidated together. Accordingly, question No. 2 for the assessment year 1984-85 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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