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Issues Involved:
1. Deletion of the Excise Duty Rebate of Rs. 26,13,819 from the assessment. 2. Deletion of the disallowance of the expenses on running and maintenance of Jeeps and cars under section 37(3A). Detailed Analysis: 1. Deletion of the Excise Duty Rebate of Rs. 26,13,819 from the assessment: The assessee, a Public Limited Company, was involved in manufacturing sugar, oil, confectionery, and tea. During the assessment year 1985-86, the company claimed an excise duty rebate based on Government of India notifications. The controversy arose regarding the computation of the average production during the base period for determining the rebate. The Excise Department and the assessee had different interpretations of how to calculate the average production, leading to a dispute over the rebate amount. The assessee calculated the rebate based on total production during the base period, including years with zero production, resulting in a higher rebate claim. The Excise Department, however, excluded the years with zero production, leading to a lower rebate calculation. The dispute resulted in a difference of Rs. 26,13,819. The assessee filed writ petitions before the Calcutta High Court, which issued interim orders allowing the company to claim the higher rebate amount upon furnishing a bank guarantee. The assessee included this rebate amount under current liabilities in its balance sheet, not as income, arguing that the amount was disputed and pending final adjudication by the Supreme Court. The Assessing Officer included the rebate amount as taxable income for the assessment year 1985-86, citing the cash basis of accounting followed by the assessee. However, the CIT(Appeals) accepted the assessee's contention that the amount received under interim court orders did not constitute income, as it was subject to final adjudication and could be considered an advance. The Tribunal upheld the CIT(Appeals) decision, referencing the Supreme Court's judgment in Hindustan Housing & Land Development Trust Ltd., which held that amounts received under interim orders pending final adjudication do not constitute income. The Tribunal emphasized that the receipt should have the characteristics of income, which was not the case here as the right to the rebate was still disputed. 2. Deletion of the disallowance of the expenses on running and maintenance of Jeeps and cars under section 37(3A): The issue involved the disallowance of expenses on running and maintenance of Jeeps and cars claimed by the assessee under section 37(3A). The details and arguments regarding this issue were not extensively covered in the provided text, and thus, the Tribunal's decision on this matter remains unspecified in the summary. Conclusion: The Tribunal concluded that the excise duty rebate of Rs. 26,13,819 received by the assessee during the accounting year relevant to the assessment year 1985-86 did not constitute income and was rightly excluded from the assessment by the CIT(Appeals). The decision was based on the principle that amounts received under interim court orders pending final adjudication do not have the characteristics of income. The details regarding the disallowance of expenses on running and maintenance of Jeeps and cars under section 37(3A) were not elaborated in the provided text.
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