2008 (12) TMI 12 - HC - Income Tax

Whether the licence fee payable to the railways for use of land as a depot could be regarded as an accrued liability or a contingent liability - matter stood concluded in faovur of assessee by virtue of the decision of Tribunal in respect of the A.Y. 1995-96 and therefore there was no occasion for re-entering into the dispute assessee s plea is that revenue had been preferred any appeal and the issue had become final - hence appeals are remanded to the Tribunal for a consideration afresh

Summary

Issues:
1. Whether the licence fee payable to the railways for use of land as a depot is an accrued liability or a contingent liability.

Analysis:
The judgment delivered by the High Court pertains to an appeal challenging the order passed by the Income Tax Appellate Tribunal. The main issue raised in the appeals is the classification of the licence fee payable to the railways for using land as a depot, specifically whether it should be treated as an accrued liability or a contingent liability. The appellant argued that in a previous case for the assessment year 1995-1996, the Tribunal had considered the licence fee as an accrued liability, making it allowable as an expenditure in the year of accrual. However, the Tribunal in the current case did not provide any finding on this crucial aspect.

The High Court concluded that the impugned order needed to be set aside, and the matters should be remanded to the Tribunal for a fresh consideration on whether the licence fee should be treated as an accrued or contingent liability. The appellant contended that the issue was settled based on the Tribunal's decision for the assessment year 1995-1996, and there was no need to revisit the classification. The Court noted that the Tribunal should have followed its previous decision unless there was an appeal by the revenue, which was not confirmed during the proceedings.

The respondent, representing the revenue, stated that they were unsure if an appeal had been filed regarding the Tribunal's decision on the assessment year 1995-1996. Nevertheless, the Court directed the Tribunal to examine whether any appeal was made by the revenue and the potential implications of such an appeal. Consequently, the High Court set aside the impugned order, remanded the appeals to the Tribunal for a fresh consideration based on the directions provided, and scheduled the matters to be placed before the Tribunal for further directions on a specified date.

In summary, the High Court's judgment focused on the classification of the licence fee payable to the railways as either an accrued or contingent liability, emphasizing the need for a proper determination by the Tribunal based on the directions given by the Court and considering the previous decision for the assessment year 1995-1996.