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TMI Blog2003 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... unpaid amount of bottling fee has, on furnishing of the bank guarantee, to be treated as actual payment and accordingly, allowing the deduction in respect of the same under section 43B of the Act, even though the sum has not been actually paid before the due date of filing the return under section 139(1) of the Act? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in allowing depreciation on research and development assets which related to the closed business of fast food division/unit of the assessee-company and as such not used during the previous year?" Question No. 1 dwells on the claim of the assessee-respondent for deduction of the amount of bottling fee payable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was required to furnish a 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 the assessee on the latter contention and the first contention of the assessee has not been answered notwithstanding that it was raised before the Tribunal. Under such circumstances, the assessee urged before us that even if question No. 1 is decided against him, he is entitled to relief on the second contention raised by him. The second contention raised by him also raises a substantial question of law which goes to the root of the controversy and arises out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that looking to the nature of charges and provision for levy of taxation scheme under article 265 after considering a number of decisions of the 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 the State to deal in potable liquor. Therefore, question No. 3 has been decided in favour of the assessee and the claim of the assessee to deduction was found to be not falling within the ambit of section 43B of the Income-tax 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. Question No. 2 refers to allowance of the assessee's claim to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined under section 2(11) of the Act of 1961. Now under the scheme of depreciation the claim of depreciation is allowed on block of assets. It cannot be denied that the assets of the research and development division of the assessee's business form part of block of assets for the accounting period relevant to the assessment year in question. The research and development division of the assessee-company as such was not closed. Therefore, it also cannot be said that the assets in question were not used in the business of the assessee. Therefore, the assessee is entitled to deduction on account of depreciation on assets of the research and development division as part of block of assets. Learned counsel for the Revenue, on the other hand, urge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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