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Issues Involved:
1. Treatment of technical know-how fees as revenue expenditure. 2. Deletion of disallowance under section 43B. 3. Treatment of expenditure on asphalting and concreting of roads as revenue expenditure. Detailed Analysis: Ground No. 1: Treatment of Technical Know-How Fees as Revenue Expenditure The department's representative did not present any arguments and relied on the Assessing Officer's order. The assessee's counsel argued that this issue had been previously decided in favor of the assessee by the Tribunal for assessment years 1978-79 to 1983-84, and no reference had been sought by the department against this order. The current year's payment was made under the same agreement as previous years. The Tribunal found the plea of the assessee's counsel substantiated by previous orders and rejected this ground raised by the department. Ground No. 2: Deletion of Disallowance under Section 43B The CIT(Appeals) had deleted the addition of Rs. 80,03,656 under section 43B, which included amounts for sales-tax set off, central sales-tax collection, E.S. collection, M.S.L. provident fund, F.P.F. collection, octroi duty, and excise duty. The CIT(Appeals) found that the IAC(Appeals) had erred in disallowing these amounts without proper analysis. The assessee accounted for sales-tax set off on a receipt basis, as the entitlement crystallized only when the sales-tax authority passed the assessment order. The Tribunal upheld the CIT(Appeals)'s decision, rejecting the department's challenge. Ground No. 3: Treatment of Expenditure on Asphalting and Concreting of Roads as Revenue Expenditure The CIT(Appeals) held that the expenditure on asphalting and concreting of roads was of a revenue nature. The department argued that this led to the creation of a new asset and should not be allowed as revenue expenditure. The assessee contended that it was merely a repair or improvement. The Tribunal referred to the jurisdictional High Court's decision, which supported the assessee's view, and rejected the department's ground. Separate Judgment by Accountant Member on Ground No. 2: The Accountant Member disagreed with the Judicial Member on the allowability of deduction under section 43B. He argued that sales-tax collected but not paid should be treated as a trading receipt and taxed, as section 43B mandates actual payment for deduction. He emphasized the legislative intent behind section 43B, which was to curb practices where statutory liabilities were not discharged but claimed as deductions. He cited various Supreme Court decisions to support his view that only actual payments should be allowed as deductions under section 43B. He concluded that Rs. 80,03,656, being a revenue receipt and not paid, could not be allowed as a deduction. Third Member Order: The Third Member agreed with the Judicial Member, stating that the provisions of section 43B were not applicable to the sales-tax set off in the assessee's case. He noted that the assessee followed a consistent method of accounting, which was accepted by the Tribunal in earlier years and by the department in subsequent years. The Third Member emphasized that settled positions should not be disturbed unless fresh facts are discovered. He concluded that the addition on account of sales-tax set off could not be legally made in the year under consideration. Conclusion: The appeal was dismissed on all grounds, except for the issue under section 43B, where the Third Member's decision prevailed, agreeing with the Judicial Member that section 43B was not applicable to the sales-tax set off in this case.
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