TMI Blog2003 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... y – (3) Whether bottling fees chargeable and interest chargeable on late payment of bottling fees, amounts to tax, duty, cess or fees within the meaning of section 43B, so as to attract the said provisions while considering allowability of deduction of such expenses?" - - - - - Dated:- 24-9-2003 - Judge(s) : RAJESH BALIA., SUNIL KUMAR GARG. JUDGMENT We have heard learned counsel for the parties. In this appeal against the judgment of the Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur, dated March 30, 2001, the following two questions were framed as substantial questions of law involved in the appeal vide order dated February 15, 2002: "(1) Whether, on the facts, and in the circumstances of the case, the Income-tax Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability 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 April 1, 1989. Two-fold contentions were raised in support of the claim of deduction before the Tribunal on behalf of the assessee: firstly that bottling fee is not a fee in its technical sense as an impost and part of the 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 43B. Such liability which is of revenue in nature is allowable as deduction when such liability is incurred irrespective of its payment on due dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bottling fees, amounts to tax, duty, cess or fees within the meaning of section 43B of the Income-tax 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 of 2002-CIT v. Udaipur Distillary Co. Ltd. (No. 1) [2004] 268 ITR 305 (Raj) the respondent in this case also, in which the same issues were raised in respect of the assessment year 1988-89, this court vide its judgment dated September 3, 2003, has answered question No. 1 holding that furnishing of a bank guarantee cannot be treated equivalent to actual payment. Therefore, if the bottling fee is to be considered as "fee" in its technical sense, the requirement of section 43B not fulfilled. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the assessee has raised two-fold contentions for sustaining his claim. Firstly, it is submitted that the research and development assets did not relate solely to the fast food division of the company but also relate to the manufacture and sale of liquor. The research and development division was also rendering services for its liquor business and the liquor business has not been closed at any stage. Therefore, the factual foundation on the basis of which Assessing Officer has disallowed the claim did not exist. Secondly, it was contended that since the amendment of section 32 with effect from April 1, 1988, the scheme of depreciation has under gone radical change vide the Taxation Laws (Amendment and Miscellaneous Provisions) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year. However, we are of the opinion that in view of the findings of fact recorded by the learned Tribunal in this regard, this question really does not arise for consideration to affect the final decision. Apparently, as per facts not in dispute, the research and development division, of which the assets formed part, was not closed albeit it was confined in its activities to the other business of the assessee than fast food. Once this is found, the assets relating to research and development cannot be excluded because part of the assessee's business is closed to which also the research and development division might be rendering its services. It may not have been used for the business relating to the fast food division. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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