9911796707
TMI Blog1991 (6) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... orage and transit wastage was filed before the AO. It was urged before the AO by the assessee that this being a statutory liability under the U.P. Excise Act, 1910, the same was allowable as business expenditure. The AO observed that this levy of excise duty was in respect of the excess wastage of liquor during storage and transit from distillery to various bonded warehouses. Since the duty was in respect of shortage in excess of the prescribed limit under Excise Rules, according to the AO the same was a penal nature and, therefore, it was not allowable as held by him in the earlier years. 3. Before the CIT(A), it was urged that the excise duty on storage and transit wastage was levied on the assessee under the U.P. Excise Act. This duty is levied under s. 28(1)(c) of that Act. This was, however, held to be not chargeable by the Allahabad High Court, except for transit wastage and liquor transported in bottles. For the assessment year under appeal, the liability, according to the assessee, on transit wastage on bottles duty was Rs. 63,930 and the balance duty was disputed. The Excise authorities had filed a Special Petition against the order of the Allahabad High Court which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given a detailed note which is made a part of this order as Annexure 'A'. On the basis of this note, he urged that the claim of the assessee was allowable. 5. The ld. Sr. Deptl. Representative, on the other hand, contended that the issue was squarely covered against the assessee by the order of the Tribunal dt.29th March, 1989in ITA Nos. 4310/and 4039/85 for the asst. yr. 1981-82 in the case of the assessee itself. He, further, urged that since Allahabad High Court had struck down the levy, there was no liability and, therefore, the same was not allowable. He, therefore, supported the order of the CIT(A). 6. We have carefully considered the rival submissions. The Tribunal for the asst. yr. 1981-82 in the case of the assessee itself has rejected the claim. Even a Misc. Application subsequently filed by the assessee, was rejected by the Tribunal covering the point now made out by the assessee. We have considered the detailed note filed on behalf of the assessee. We are unable to accept the proposition for review of the earlier order of the Tribunal. Respectfully following the said order and the subsequent order in the Misc. Petition, we find no merit in this ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption of Rs. 5,000 under s. 80VV. Respectfully following the above order of the Tribunal we are of the opinion that the expenditure which is not allowable under s. 80VV has to be considered under s. 37(1) as not having been incurred in connection with income-tax proceedings before the income-tax authorities, but any other matters like company law matters, consultancy, etc. In view of this position, we are unable to sustain the order of the CIT(A) disallowing deduction of Rs. 13,200. The ITO is directed to allow the same under s. 37(1) of the Act. 11. The third ground of appeal is that the learned CIT(A) has erred in sustaining the disallowance under s. 40A(3) of the Act, of Rs.. 64,484 out of the total disallowance made by the learned IAC at Rs. 95,883. The AO disallowed payments of expenditure in cash in sums exceeding Rs. 2,500 aggregating to Rs. 95,883 in violation of the provisions of s. 40A(3) of the Act. These payments were to as many as 15 parties. According to the assessee, these payments were made in cash in sums exceeding Rs. 2,500 in exceptional circumstances as provided in r. 6DD(j) of the IT Rules, 1962. The AO did not accept the same and made disallowance of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls at Rs. 14,500 was made towards the purchase of spirit as advance because spirit was normally sold on advance payment. Further, the payment was made at Hargaon, where the assessee did not have any bank account. Photocopies of the vouchers, cash receipt and copy of the accounts of the party were filed before the AO and the CIT(A). It was, therefore, urged that the identity of the seller was not doubted. The party was assessed to income-tax under PAN 34-300- CN-0142 by the ITO,Central Circle,Bombay. So far as the payments to M/s K.S. Wood Industries, Faizabad is concerned, it is stated that these were made for purchase of wooden boxes. Photocopies of the vouchers, cash receipts and copy of account and confirmation certificates were filed before the lower authorities. The ld. Sr. Deptl. Representative, on the other hand, submitted that there were no exceptional circumstances due to which the assessee could not make the payments by crossed cheques or drafts. 13. The learned counsel of the assessee also submitted that the payment was made in cash on the party's insistence as the assessee was in urgent need of material. According to the assessee, this payment was covered by para 4 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment had to be made in cash. On the other hand, the photocopy of the receipt issued by Veer Jawan Wood Works showed that the payment was received in the account of the party with the following observations: "Hamaray Hisab Main Jama Kiya Jai." Taking into consideration that both the parties were at Faizabad, where they maintained the respective bank accounts, it could not be accepted in the absence of the evidence that exceptional circumstances existed which compelled the assessee to make the payment in cash. 18. The ld. D.R., on the other hand, has supported the order of the CIT(A). 19. In our opinion, there is no merit in the contention put forth on behalf of the assessee. The CIT(A) has recorded a finding that there was no evidence brought on record by the assessee to show that the cheque earlier issued bounced. Nothing has been brought before us also on this account. Both the parties were maintaining bank account at the same station. There is no evidence available on record that the other party insisted on payment in cash. We, therefore, do not find any merit in this contention. 20. Regarding 3rd item (S. No. 9 of the CIT(A)'s order) the CIT(A) held that the payment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had its accounts. The disallowance was, therefore, confirmed by the CIT(A). 23. Before us, it has been urged on behalf of the assessee that the payment was made to the above party towards the purchase of flowers which is a wild crop. These flowers are collected by villagers of small means. The parties sell in cash because they in turn have to pay to the villagers in cash from whom the flowers are collected. Further, these flowers were purchased as and when required and, hence, considering the urgency and business necessity, the assessee was forced to pay in cash. It was, therefore, urged that it was because of the business necessity and the circumstances of the case that the payment had to be made in cash. The ld. D.R., on the other hand, has supported the order of the CIT(A). 24. In our opinion, looking to the nature of the purchases of flowers, which is for preparing country liquor, which is the business of the assessee, the payment has to be made to the villagers, it constituted an exceptional circumstance. The disallowance is, accordingly, deleted. 25. Regarding Item No. 6 (S. No. 13 of the CIT(A)'s order), i.e., payment made to Raja Ram, Faizabad the same submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,360 made to Audh Oxygen Company, Faizabad, it was stated before the CIT(A) that the purchase of gas cylinders was essentially required and the cash payment was sought by the party, otherwise the business would have been jeopardised. The claim was disallowed by the CIT(A) because it was a regular party. The party maintained bank account and other payments were made by cheque on the same date. According to the learned counsel for the assessee, the payment was covered by para 4(b) of the Board's circular referred to earlier, i.e., because the payment by cheque /draft was not practicable and it would have caused genuine difficulty to the assessee having regard to the nature of business and the necessity for expeditious settlement thereof. The ld. D.R., on the other hand, supported the order of the CIT(A). 32. In our opinion, the claim has rightly been rejected by the CIT(A). It is not understood as and when the assessee made payments on the same day of part amount by cheque, why this small payment could also not be made through cheque. In our opinion, there were no exceptional circumstances which prevented the assessee from making the payment through crossed cheque/draft. The disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as thought admissible to claim the loss in the asst. yr. 1982-83. He, therefore, urged that the loss was allowable for the asst. yr. 1982-83. In this connection, he has relied upon the judgment of Hon'ble Allahabad High Court reported as CIT vs. U.B.S. Publishers Distributors (1983) 34 CTR (All) 86 : (1984) 147 ITR 114 (All). 35. The ld. D.R., on the other hand, has supported the order of the CIT(A). 36. The other loss claimed is of Rs. 62,866. The CIT(A) did not allow the claim of debts having become bad on account of evidence. The learned counsel for the assessee claimed that these were business losses and, therefore, are admissible as deduction in view of the judgment of the Hon'ble Madhya Pradesh High Court reported as (1988) TLR 1048 and of the Bombay High Court reported as Jethabhai Hirji and Jethabhai Ramdas vs. CIT 1978 CTR (Bom) 415 : (1979) 120 ITR 792 (Bom). The ld. D.R., on the other hand, submitted that no evidence was brought on record by the assessee to show that any efforts were made to recover the same and they had really become bad. In such circumstances, he supported the order of the CIT(A). 37. We have given our careful consideration to the rival submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same was accepted by the AO and no disallowance was made. The disallowance was challenged by the assessee before the CIT(A). Before the CIT(A), it was urged that the restriction of breakage to 5 per cent was arbitrary and not based on any material. It was stated that the breakage/damage in the bottles is a result of various factors, particularly the circumstances involved and the nature of the assessee's business. According to the learned counsel for the assessee, the empty bottles purchased are both new and old. The bottles are packed in gunny bags and transported through trucks by road/rail and due to mishandling, there occurs breakage on the way. Then after the receipt of the bottles at the godown, they are unpacked, washed, labels are removed and are sent for labelling and filling, etc. Since the entire operation was done manually, the breakage was bound to occur. It was, therefore, urged that the wastage should have been worked out on bottles actually handled and not on the bottles consumed. It was also submitted before the CIT(A) that, in the earlier years, the Revenue authorities had considered the yard-stick through the number of bottles only and not actually consumed. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40. The CIT(A) observed that even if the assessee's contention were accepted that the breakage should be worked out in relation to handling of bottles the percentage works out to 12.17 per cent, which is more than what has been shown at 9.9 per cent in the asst. yr. 1980-81 and 10.64 per cent in the asst. yr. 1978-79. The CIT(A) also observed that for the asst. yrs. 1978-79 and 1979-80, no additions were made by the AO in respect of excessive wastage. For the asst. yr. 1981-82, the CIT(A) restricted the wastage to 11 per cent and this was made after holding that though it was not feasible to maintain the record of breakage at each stage, while the same should have been made periodically at least. Agreeing with the observations of his predecessor that the breakage is the normal feature of the trade, the CIT(A), however, held that the reasonableness of the same had to be seen in respect of the assessee's own history as compared to the earlier years. It was also observed that no factors were pointed out which led to the excessive breakage in the asst. yr. 1982-83 as compared to the one declared in the asst. yr. 1980-81. The CIT(A), therefore, restricted the reasonable breakage to 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies Act was relevant for industrial alcohol only, which is used by the assessee in the manufacture of liquor. Thus there was no question of any bottles in the manufacture of industrial alcohol. He further pointed out that the Tribunal assumed that this note referred to the finished products, i.e., Indian made foreign liquor and country liquor which have to be bottled before sale. In support of the above contention an order of the Company Law Board dt.30th Aug., 1979has been placed in the paper books which makes it clear that the obligatory cost element relates to the industrial alcohol. He also pointed out that the Tribunal's observations for the asst. yr. 1981-82 in relation to the Notes No. 3 8 of the Auditor's report in the published accounts for the asst. yr. 1981-82 was in the context of determining the claim for breakage. The learned counsel for the assessee pointed out that if an enquiry had been made from the assessee at that stage; the position would have been clarified. He submitted that Note 3 relates to the finished goods and raw material and stores and spares. As regards the finished goods and raw materials, there was no dispute that physical verification was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed was reasonable and should have been allowed by the CIT(A) in full. He further urged that the shortage claimed in the earlier years were in the neighbourhood of 11 per cent but that by itself would not entitle the Revenue to restrict the claim of breakage to 11 per cent and the entire claim should have been allowed as the breakage may vary from year to year depending upon the number of stages involved in the handling. He, therefore, urged that the addition sustained by the CIT(A) should be deleted. 44. The ld. D.R., on the other hand, stated that the CIT(A)'s order for the asst. yr. 1981-82 should not be considered as he had exceeded his jurisdiction in not accepting the observations of the Tribunal in the remand order. He, therefore, urged that the breakage of bottles allowed of 750 ml by the AO at 5 per cent is quite reasonable. He supported the order of the Assessing Officer. 45. We have given our careful consideration to the rival submissions. The assessee has given a detailed note on the observations of the Tribunal with reference to the audit note in its order for the asst. yr. 1981-82, which we have referred to earlier. The learned counsel for the assessee has gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the variation is within the reasonable limits. It is an admitted fact that the bottles are of glass. It is more prone to breakage than any other articles. The variation for the year 1982-83, when compared to the asst. yr. 1978-79 which has been accepted by the department, in our opinion, is within the reasonable limits. In such circumstances, we are of the opinion that the assessee was entitled to the entire claim of breakages of bottles of 750 ml. The CIT(A) was not justified in restricting the breakage to 11 per cent as against 12.17 per cent claimed by the assessee. In view of these submissions, we find merit in the ground of appeal of the assessee. At the same time, we do not find any merit in the cross-ground of appeal by the Revenue. 47. The 6th ground of appeal by the assessee is that the CIT(A) has erred in sustaining the disallowance of a sum of Rs. 11,28,000 in excise duty relatable to prior years provided for and written off in the relevant accounting year. The assessee claimed a deduction of Rs. 6,12,517 for storage transit waste duty in excess of the limits prescribed by the excise laws. The learned counsel for the assessee conceded that the issue was decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier years upto asst. yr. 1981-82. It was so, because the resolution by the assessee-company for non-charging of interest from M/s Narang Breweries was passed on20th Oct., 1980, i.e., prior to the commencement of the accounting period from1st Jan., 1981. It was submitted on behalf of the assessee before the CIT(A) that the issue was squarely covered in the assessee's favour by the decision of the Tribunal in the case of M/s Saraswati Marketing Co. Ltd. for the asst. yr. 1979-80, wherein it was held that the interest was not chargeable in case resolution was passed prior to the commencement of the accounting year. It was also stated that there was no nexus between the borrowings of the assessee-company and the amounts advanced to M/s Narang Breweries. The CIT(A) observed that from the perusal of the Tribunal's order for the asst. yr. 1978-79 in ITA No. 3146/82, it was found that the contention of the assessee was not accepted by the Tribunal on the ground that the assessee was following mercantile system of accounting, the amount payable or receivable had to be taken on accrual and due basis. It was, therefore, held that the interest was due to and receivable by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, a resolution was passed by the assessee company's Board of Directors on22nd Oct., 1980giving up interest income from Narang Breweries. According to the learned counsel for the assessee, the CIT(A) had inadvertently mentioned the date of this resolution as22nd Dec., 1980. The submission was that since the assessee had passed the resolution before the commencement of the accounting period from 1st Jan., 1981 giving up interest from M/s Narang Breweries, no interest accrued for the accounting period, i.e., calendar year 1981 relevant to the asst. yr. 1982-83 under appeal. He also urged that the CIT(A) in earlier part of her order had referred to the resolution passed on 22nd Oct., 1980 (inadvertently mentioned as 22nd Dec., 1980), but while arriving at the conclusion, merely referred to the resolution of May 1981 which was nothing else but reiteration of the resolution passed on 22nd Oct., 1980. He, therefore, urged that, in the ratio of the order of the Tribunal in the case of Saraswati Marketing Co. Ltd. the claim of the assessee was allowable. He also placed reliance on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Birla Gwalior Ltd. 1973 CTR (SC) 349 : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable to the assessee company. He also referred to the conduct of the parties which showed that no interest was to be charged vide resolutions dt.22nd Oct., 1980and28th May, 1981. He also referred to the Profit and Loss Account and the Balance sheet of the firm where no interest was claimed or provided. He also pointed out that there was no need for a separate agreement between the partners for not providing for interest because it was a matter between the assessee and the other partners of the firm and it was not as if the firm was a separate juridical entity by itself. Therefore, it was by a mutual understanding between the assessee and the other partners of the firm that it was agreed that no provisions for interest would have to be made in the firm's books. Further the law does not require any agreement in writing for this purpose. Evidence for the conduct of the parties by way of resolution and relevant entries in their books of account established such a change in the terms of agreement relating to interest payment. According to the learned counsel for the assessee, this position was made clear by s. 11 of the Indian Partnership Act, 1932, but unfortunately this could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue was squarely covered against the assessee by the order of the Tribunal for the asst. yr. 1981-82 and, therefore, the CIT(A) was not justified in deleting interest for the period from1st June, 1981onwards. 53. We have carefully considered the rival submissions. The CIT(A) has referred to the resolution passed by the Board of directors of the assessee-company on28th May, 1981. A copy of this resolution has been placed in the paper book. The resolution reads as under: "The Board considered the debit balance of Rs. 17,66,742.63 standing in the name of our partnership concern, M/s Narang Breweries and resolved that no interest be charged from them as the concern is not in a position to pay and is not working at present". 54. On page 101, statement of losses of Narang Breweries from30th Nov., 1969to30th April, 1986has been filed. As on30th Nov., 1981, relevant to the asst. yr. 1982-83, the cumulative losses have been shown at Rs. 2,31,40,074. As on30th April, 1986, the cumulative losses have swelled up to Rs. 3,52,14,029. From the above state of affairs, it is apparent that the financial position of M/s Narang Breweries is very precarious. In such circumstances, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the year 1981 only. It applies for the subsequent years also. This is also justifiable in view of the huge losses M/s Narang Breweries have been suffering, relevant figures of which we have noted for two years. The issue is also covered by the order of the Delhi Bench 'C' in the case of Saraswati Marketing Co. Ltd. We are conscious of the fact that the Tribunal had rejected the claim of the assessee for the asst. yr. 1981-82. However, we notice, as canvassed by the learned counsel for the assessee, the judgment of the Hon'ble Surpreme Court in the case of Birla Gwalior Ltd. and that of the Punjab and Haryana High Court in Shiv Prakash Janak Raj Co. and of the Tribunal in the case of Saraswati Marketing Co. Ltd. were not brought to the notice of the Tribunal in that year or for that matter even for earlier years. In view of the fact that the ratios of these judgments are squarely applicable to the case of the assessee and these cases not having been brought to the notice of the Tribunal in the earlier years, we have no hesitation in making a departure from the earlier order of the Tribunal for the asst. yr. 1981-82. In view of the detailed discussions and also the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void, the assessee was under no obligation to make any payment to the U.P. Govt. According to him in case the same arises in future, it could be as well claimed. While rebutting the appellant's arguments in respect of various case laws, it was submitted by him that in case of Girvar Lal Shrichand vs. CIT (1967) 63 ITR 248 (All), their Lordships of Allahabad High Court observed, that in mercantile system of accounting, no deduction can be made unless ascertained and enforceable liability exists, not even if the liability is likely to be enforced in future. He also relied on their Lordships observation in the case of (All), their Lordships of Allahabad High Court observed that, in mercantile system of accounting, no deduction can be made unless ascertained and enforceable liability exists, not even if the liability is likely to be enforced in future. He also relied on their Lordships observation in the case of Deepchand Shyam Sunder vs. CIT (1980) 17 CTR (All) 75:(1980) 125 ITR 724 (All). As regards the collection made by the appellant from the buyers, it is stated by the IAC(A) that, as held in the case of Deccan Hides, 142 ITR 175 the excess sales-tax collected constitutes a tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., 1986 to1st Jan., 1987to CSD, no amount has been paid to the other parties which is substantial. Thus, while the charges were struck down in 1979, the appellant kept on collecting the same till 1986. As the amount was collected as a part of sale price, the ratio of Supreme Court decision rendered in case of Chowringhee Sales Bureau vs. CIT 1973 CTR (SC) 44: (1973) 87 ITR 542 (SC) is fully applicable. The deduction can be allowed only in the year where the payment is made. As regards reliance placed on 105 ITR 864, while discussing levy on storage and transit charges, I have already held that facts are distinguishable. As regards 136 ITR 464, the facts are not on all fours with that of the case of the appellant. There the question related to excess local taxes collected by the lessor and there was a Court decree requiring the party to refund the amount. In this case the amount has been recovered as a part of sale price and there is no decree to refund the amount to the party. Therefore, the ratio laid down in that case is not applicable to the appellant's case. Further, as the amount stood collected, the theory of real income does not come in picture at all. As stated earlier, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 CTR (Bom) 162: (1982) 136 ITR 464 (Bom). The CIT(A) rejected the claim for the entire duty collected, as, according to her, no liability had accrued in view of the judgment of the Hon'ble Allahabad High Court and, therefore, no deduction was to be allowed. So far as the duty collected from CSD was concerned, the CIT(A) stated that the case law relied upon as 136 ITR 464 was distinguishable and not applicable to the facts of the case. This claim was also rejected. 58. Aggrieved by the above order of the CIT(A), the assessee has preferred the appeal before the Tribunal. The same arguments have been repeated before us and reliance has been placed on a number of judicial pronouncements. Alternative claim was also pressed. The ld. D.R., on the other hand, has referred to the order of the Tribunal for the asst. yr. 1981-82 referred to earlier and contended that the Tribunal had already rejected the claim. He further pointed out that the nature of the claim was similar to the one as claimed in ground No. 1 which already stands rejected by the Tribunal. He, therefore, submitted that all his arguments in ground No. 1 should be adopted in these grounds also. He also contended that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the same being payable/paid to the CSD. The alternative ground of appeal by the assessee is, therefore, accepted. The order of the CIT(A) is, therefore, modified accordingly and the AO is directed to allow deduction to the extent of Rs. 6,21,225. 61. Ground Nos. 10 11 are in respect of interest charged under s. 139(8) at Rs. 4,56,675 and under s. 217 of Rs. 9,93,309. It is urged in the grounds of appeal that the CIT(A) has allowed only consequential relief and has not totally quashed the interest levy especially considering that the said interest was charged without affording lawful opportunity in this matter to the assessee and further especially considering that the said interest was capable and liable to be waived under the provisions of the IT Act, 1961. However, at the time of hearing of the appeals, the learned counsel for the assessee stated that these two grounds were only consequential in nature and, therefore, called for no specific consideration. We do not, therefore, find any merit in these two grounds of appeal. Undoubtedly, the Assessing Officer will recalculate the interest under s. 139(8) and s. 217 after giving effect to our order. 62. Ground Nos. 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. CIT vs. Ratanchand Kapoor on the system of accounting followed there. Unlike in that case the system of accounting followed here is purely mercantile. Hence, the ratio of that case can never be applicable in the instant case. (iii) The Delhi High Court made it very clear in Rattan chand Kapoor's case at p. 5, "that in the light of Kedarnath Jute Mfg. case (1971) 82 ITR 363 (SC), that even without an entry in the accounts the claim can be made in the relevant asst. yr." The further discussion by the Court related to the peculiar factual context of that case. The Delhi High Court did not modify in any way the clear position laid down by the Supreme Court in Kedarnath Jute Mfg. Co.'s case. (iv) The effect of ss. 28 and 77 of the U.P. Excise Act 1910 was apparently not brought to the notice of the Tribunal. If that had been done it would not have perhaps held that under the Rules of the U.P. Excise Manual a liability arises to the assessee only when an appropriate order is received by the assessee from the Excise Department. The Rules do not say and cannot say that the liability under the U.P. Excise Act will be fastened upon the assessee only after the Inspector obtained an exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t notwithstanding the decision of the Delhi High Court on the leviability of excise duty being bad in law, the assessee which has been following the mercantile system of accounting was entitled to claim a deduction for the provision for duty made by it in its books of the relevant year as the Excise Department had gone in appeal before the Hon'ble Supreme Court and was questioning the correctness of the decision of the Delhi High Court and was insisting that the assessee was liable to pay the excise duty. It was for this purpose that (1983) 33 CTR (All) 221: (1983) 143 ITR 771 (All) was cited but unfortunately the Tribunal even though it noticed this decision overlooked the above position in law and recorded a conclusion on a point of law contrary to that laid down by the Allahabad High Court. There were three points of distinction made by the Tribunal in para 6.6 of its order. None of them seems to be valid in law because (i) In the light of Kedar Nath Jute supra these need not be any provision made or entry made in the books if assessee is following the mercantile system. The claim can be made after the return is filed but before the assessment is complete. (ii) The fact of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981) 132 ITR 457 was cited before it on account of some fear that the claim will not be allowed in some later year of payment of duty. On the contrary that decision was cited as a direct authority for the proposition that liability having accrued under the taxing Act, deduction was allowable in the year of such accrual where accounts are kept on mercantile basis. Unfortunately, the Tribunal missed this claim of the assessee and, hence, failed to apply the ratio of (1981) 132 ITR 457 which is directly in point here. (x) The decision in Tribunal vs. B. Hill Co. (P) Ltd. (1982) 29 CTR (All) 301: (1983) 142 ITR 185 (All) was not applied by the Tribunal in favour of the assessee because. (a) No demand was raised by the Excise Deptt. (But in 29 CTR (All) 301: 142 ITR 185 also no demand was raised by the ST Deptt.). (b) In 29 CTR (All) 301: 142 ITR 185 the assessee's writ petition disputing the sales-tax liability was pending before the High Court. On the other hand the Allahabad High Court had struck down the excise duty on excess wastage in the assessee's case here. (Unfortunately, the Tribunal overlooked the fact that an SLP has been filed by the Excise Deptt. before the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r with the full report of the circumstances to the Assistant Excise Commissioner or Deputy Excise Commissioner of the charge. The Assistant Excise Commissioner/Deputy Excise Commissioner shall charge duty on the excess of wastage if he is satisfied that the wastage in excess of the prescribed limit is not on account of any accident or unavoidable cause. In case the excess wastage is on account of an accident or other unavoidable cause, the matter will be referred to the Excise Commissioner for orders. Rule 814 under the U.P. Excise Act, 1910 Allowance for loss in transit: An allowance upto 0.5 per cent will be made for the actual loss in transit by leakage, evaporation on to other unavoidable cause, of spirit transported or exported under bond in wooden casks or metal vessels. The allowance to be made under this rule will be determined by deducting from the quantity of spirit despatched from the distillery the quantity received at the place of destination, both quantities being stated in terms of alcohol. The allowance will be calculated on the quantity contained in each wooden cask metal vessels comprised in a consignment. If the report of the officer by whom the consignment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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