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Issues:
1. Whether a contingent liability not acknowledged as a debt by the assessee qualifies for deduction under the Income-tax Act? 2. Whether the principles laid down by the Supreme Court in certain cases are applicable in determining the allowability of excise duty as a deduction in the assessment year 1981-82? Analysis: 1. The case involved a dispute regarding the classification of carbon paper for excise duty purposes. The assessee contested the classification under a different item than previously assessed. The excise authorities demanded a significant amount of duty based on this reclassification, leading to a dispute over the liability for the payment. 2. The Income-tax Officer initially disallowed the deduction claim for the assessment year 1980-81, citing the pending writ petition challenging the excise duty levy. However, the Commissioner of Income-tax later allowed the claim, which was further upheld by the Tribunal based on the principles established in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, emphasizing that the deduction eligibility depends on the law's provisions and not solely on the assessee's view or book entries. 3. The petitioner argued that the excise duty liability for the years 1976-77 to 1979-80 should not be deductible in the assessment year 1981-82. The court rejected this contention, highlighting that the Inspecting Assistant Commissioner did not raise such an objection, and the Tribunal did not consider this argument. The court emphasized that the liability's timing was crucial, not the years to which it pertained, and no valid contention was raised regarding the deduction's allowance in earlier years. 4. The court dismissed the petition, stating that the proposed legal questions were academic, as the principles from the Kedarnath Jute case were clear. The court found no merit in the petitioner's arguments and concluded that the questions raised did not stem from the Tribunal's order, leading to the dismissal of the petition without costs.
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