TMI Blog2003 (10) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 12,67,656 by holding that unpaid amount of bottling fee has, on furnishing of bank guarantee, to be treated as actual payment and accordingly the deduction in respect of the same cannot be denied under s. 43B of the IT Act, 1961 ? (Q. 2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 38,442 made by the AO on account of disallowance of research and development expenses not covered under s. 35(1)(iv) of the IT Act, by wrongly relying on the decision in ITA No. 1546/Jp/1995, dt. 30th March, 2001 ? (Q. 3) Whether, on the facts and in the circumstances, the Tribunal is justified in allowing the depreciation on research and development assets which relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set of facts relating to the same assessee in DB IT Appeal No. 8/2002 which was decided on 3rd Sept., 2003 [reported as CIT vs. Udaipur Distillery Co. Ltd. (2004) 186 CTR (Raj) 1'Ed.]. It was found that the Tribunal was not right in holding the bank guarantee to be treated as actual payment to satisfy the condition of s. 43B before any deduction can be claimed in respect of any amount which is payable by way of tax, duty, cess or fee. The conclusion was recorded as under : Requirement of s. 43B of the Act is actual payment and not deemed payment as condition precedent for laying down the claim to the deduction in respect of any of the expenses incurred by the assessee during the relevant previous year specified in s. 43B. Furnishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntains his books of account as per mercantile system, he is entitled to claim deduction of such expenses incurred by him by way of bottling fee for the accounting period when it becomes payable to the State Government as consideration. Such liability is allowable as expenditure in the year in which it is incurred notwithstanding the actual payment has been deferred to a future date. It was also held that 'fee' in its technical sense means compulsory exaction by the State in respect of services performed by the State for the benefit of fee-payers. The expression fee under Rajasthan Excise Act and Rules has been used as price for consideration for use of privilege by the licensee which is in exclusive control of the State. The former ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and development division of its business was also engaged in R D work for its remaining business and, therefore, it cannot said that the assets related to a closed business. The Tribunal has accepted this contention of the assessee. 8. This question has also been subject-matter of another appeal filed by Revenue in the matter of same respondent-assessee, DB IT Appeal No. 78/2003 CIT vs. Udaipur Distillery Co. Ltd. [reported at (2004) 186 CTR (Raj) 29'Ed.], which related to asst. yr. 1992-93. 9. It was submitted by the assessee that R D did not solely exist for fast food division of the company but also relates to the manufacture and sale of liquor. Research and development division was also rendering services for its liquor bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation has to be given while computing the total taxable income. The Tribunal has recorded the finding of fact in favour of assessee that the R D division has neither been closed nor discarded as yet and the same is used for liquor business of the assessee. In view of the aforesaid finding of the Tribunal, which is supported by material on record, it must be held that the R D division was alive during the accounting period in question. It has not closed all its businesses and it was being used as part of its remaining business. Therefore, depreciation in respect of assets of R D division ought to have been allowed as deduction as part of block assets of assessee. 11. In view of the aforesaid, following the decision rendered in DB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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