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TMI Blog2004 (11) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee's claim for investment allowance on the ground that the products manufactured by the assessee was not hit by item No. 1 of the Eleventh Schedule to the Income-tax Act?" Briefly stated, the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1980-81. The respondent is a public limited company and is engaged in the business of manufacture and sale of rectified spirit and Indian made foreign liquor. During the assessment year in question, it claimed deduction of Rs. 5,81,534 relating to export duty while computing the income. It has realised the export duty on the Indian made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt allowance in respect of such plant and machinery. The Revenue's appeal before the Tribunal has failed. We have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue, and Sri Vikram Gulati, learned standing counsel appearing for the respondent. Learned counsel for the Revenue submitted that the amount of export duty forms part of the trading receipt and in support thereof he has relied upon the two decisions of the hon'ble Supreme Court in the cases of Chowringhee Sales Bureau P. Ltd. v. CIT [1973] 87 ITR 542 and Sinclair Murray and Co. P. Ltd. v. CIT [1974] 97 ITR 615. He further submitted that the deduction of liability on the ground of export duty could be allowed only in the year when it is actually paid to the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction of statutory liability of the export duty during the assessment year in question. The apex court in the cases of Chowringhee Sales Bureau P. Ltd. [1973] 87 ITR 542 and Sinclair Murray and Co. P. Ltd. [1974] 97 ITR 615 has only held that the statutory impost realised by the assessee do form part of the trading receipt and an allowable deduction when it is paid. However, in view of decision of the apex court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 where an assessee follows the mercantile system of accounting, the liability is allowable as deduction moment it is accrued and not when it is paid. So far as the question of investment allowance is concerned, we find that the Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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