TMI Blog1988 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of Rs. 5,51,388 in the assessment year 1976-77 keeping in view the ratio of the decision of the Hon'ble High Court in 121 ITR 854 (sic)"? Income-tax Case No. 215 of 1986: (i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in admitting the additional ground of appeal for additional claim of Rs. 1,77,167 keeping in view the decision of the Supreme Court in Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 ? (ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that Rs. 1,60,000 were allowable expenses incurred wholly and exclusively for the purpose of the assessee's business ? (iii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in allowing the liability on account of additional excise duty to the extent of Rs. 8,33,926 in view of the ratio of the decision of the Madras High Court in 121 ITR 854 (sic) Income-tax Case No. 216 of 1986: "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 215 of 1986. similar question in respect of the assessee for the assessment year 1977-78 was directed to be referred to this court by an order made on April 8, 1987 in Income-tax Case No. 122 of 1986 (CIT v. Mohan Meakin Breweries Ltd. [1988] 172 ITR 436). Consequently, we direct the Tribunal to state case and refer the following question for the decision of this court in respect of the assessment year 1976-77 : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal Was correct in law in admitting the fresh ground of appeal purporting to be an additional ground filed by the assessee claiming deduction of Rs. 1,77,167 in respect of expenses on food, refreshment, etc." The question regarding the guest house raised in the applications (except Income-tax Case No. 1 of 1987) in respect of the three assessment years, relating to the same assessee, was also the subject-matter of Income-tax Cases Nos. 123, 124 and 125 of 1986 which were disposed of by a common order dated April 8, 1987. By that order, the Tribunal was directed to state a case in respect of the following question for the three assessment years 1976-77, 1977-78 and 1978-79 and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt was not in the nature of a penalty but that it was only an additional excise duty levied by the U. P. State excise authorities. The deduction claimed by the assessee on payment of additional sales tax in respect of the assessment year 1977-78 was also allowed by the Commissioner of Income-tax (Appeals) as he found that the additional demand was raised in the relevant year. The Tribunal disposed of the appeals by the assessee and also by the Department, pertaining to the three assessment years in question, by a common order. It found that the assessee was maintaining accounts on the mercantile basis and that the additional demand for the amounts in question was received in the previous year relevant to each of the assessment years under consideration, and upheld the order of the Commissioner (Appeals). On separate applications under section 256(1) of the Act by the assessee as also by the Commissioner, the Tribunal was of the opinion that a question of law does arise out of its order on this point "but the same stands concluded by the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. [1971] 82 ITR 363. So, no useful purpose would be served by referring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in Rattan Chand Kapoor's case [1984] 149 ITR 1 (Delhi), arose in somewhat unusual circumstances. There, the assessee, an individual, was a partner of a firm which was dissolved and the assessee took over its assets and liabilities. The firm, during its existence, incurred sales tax liability. Demand notice was issued much after the dissolution of the firm. After receipt of the demand notice the assessee made entries in the accounts and claimed deductions in that year. It was found that the assessee was following the mercantile system of accounting. The court was of the view that it was open to the assessee to make the entry on the basis of accrual of liability or on the basis of demand raised by the sales tax authorities, and that the decision of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. [1971] 82 ITR 363, is limited to those cases in which the demand is raised by the sales tax department before the assessment has actually been completed as no revised return can be filed after the assessment is over. In V. Krishnan's case [1980] 121 ITR 859, the Madras High Court noticed that entitlement of the assessee to a particular deduction will depend on the provision of law rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 859. The circumstances of the present case are, therefore, different from the subject-matter of the earlier decisions of the two High Courts. The Tribunal dealt with the question of additional sales tax in respect of the assessment year 1977-78 on the same basis as additional excise duty. Whether the Tribunal was correct in doing so or not, is also clearly a question of law. We are of the opinion that the questions of law regarding additional excise duty and additional sales tax which admittedly arise in respect of the relevant assessment years are not covered by the earlier decision of this court in Rattan Chand Kapoor's case [1984] 149 ITR 1 (Delhi) or even by the case of V. Krishnan [1980] 121 ITR 859, decided by the Madras High Court, although those two decisions, as also the decision of the Supreme Court in Kedarnath Jute Mfg. Co. Ltd. [1971] 82 ITR 363, may be relevant and may have to be considered to decide these questions. The decisions of the Punjab and Haryana High Court in Shiv Parshad [1984] 146 ITR 397 and in Telu Ram Raunqi Ram [1984] 146 ITR 401, cited by learned counsel for the assessee are inapplicable to the facts and circumstances of the present case. An inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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