TMI Blog2019 (4) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... ctice was recognized and the only question was whether the existence of a dispute in any manner implicated the accountancy practices adopted by the asseessees in treating an unascertained liability to unquantified liability. Furthermore, Section 43B, either in Clauses (a) and (b) of sub-section (1), do not in the opinion of this court, cover the kind of licence fee that is under consideration. The reference to fee has to be always read along with the expression law in force . The documents placed on record even along with the additional grounds, make it clear that the transactions between the parties was plain and simple, a commercial one, while the land was allotted for a certain licence fee. The central issue in dispute was a retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Northern Railways in 1975; the Railways revised the licence fee on various dates and in periodical intervals for instance 08.02.1980; 23.03.1988; 28.03.1990 and subsequently again on 20.01.1999 and even on later dates. The Northern Railways also resorted to enhancing of licence fee and also claiming damages, unilaterally on retrospective basis applicable from anterior dates. These led to disputes. In the meanwhile, for the relevant assessment years, the assessee kept making provisions in its returns for the amounts which were deemed payable by the Northern Railways (but which were disputed by it and ultimately became subject matter of arbitration proceedings). These became the bone of contention with the Revenue stating that the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws : 41. Turning to the facts of the present case, the undisputed fact is that the Assessee is following the mercantile system of accounting. It has to book the liability in the year in which it arises irrespective of whether it in fact discharges the liability in that year. In that sense, the liability to pay the enhanced licence fee would arise in the year in which demand is made or to which it relates irrespective of when the enhanced fee is actually paid by the Assessee. As explained in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association (supra), the mere grant of stay of an order by a Court would not wipe away the liability. 42. In the present case, the liability of the Assessee to pay the enhanced lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw by giving a hearing to those adversely affected by the upward enhancement of liability before a decision is taken. Mr. Manchanda s characterisation of the said order, as negating the liability to pay the enhanced licence fee for all times to come does not flow on the above reading of the said order. On the other hand, it is more consistent with the plea of the Assessee that while he is not denying the liability to pay the licence fee he is only questioning the procedure involved in its revision which, according to him, is not in accordance with law. Consequently, the Court is also not able to agree with Mr. Manchanda that the Assessee has sought to mislead this Court by contending that he is not questioning the liability to pay licence f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see it would then have no liability to pay such enhanced licence fee and in the year in which such final decision is rendered, the corresponding reversal of entries will have to take place in terms of Section 41(3) of the Act. All of this, in no way, extinguishes the liability of the Assessee to pay the licence fee. The Assessee would be justified in claiming the enhanced licence fee as deduction in the year in which such enhancement has accrued even though the Assessee has not paid such enhanced licence fee in that year. This legal proposition is well settled. 4. It is thus clear that the court previously stated that the assessee/respondent s liability was not in any manner crystallized, when it claimed the expenditure, as it did at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e urged is concerned, the court is frankly taken aback by the cavalier approach by the appellant/Revenue. We say this consciously because as noticed earlier in all the previous proceedings for the previous years, Section 43B was not pressed into service as a disallowed provision. If permission to raise such question of law or additional grounds, as are sought to be urged by the Revenue is granted, the express provisions of the Act, which bind the authorities to confine the scrutiny and inquiry within strict timelines (Sections 143; 263; 147/148; etc.), would be in fact given a complete go by and at any stage of the proceedings, the Revenue would be at liberty to raise any ground leading to complete uncertainty, as far as the assessee is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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