2004 (11) TMI 88

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..... i.e., in favour of the assessee and against the Revenue.
Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by R.K. Agrawal J.- The Income-tax Appellate Tribunal, Delhi, has referred the following questions of law under section 256(1) of the Income-tax Act, 1961, for opinion to this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the liability of Rs. 5,81,534 for the export duty was allowable as a deduction in the year in question? 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 t .....

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..... t item No. 1 in the list enumerated in the Eleventh Schedule. Item No. 1 of the said Schedule relates to "beer, wine and other alcoholic spirits". In appeal, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 5,81,534 towards export duty on the ground that it is a statutory liability and the respondent is entitled to claim deduction as it is following the mercantile system of accounting. He further held that there is a separate plant for manufacture of rectified spirit and, therefore, the respondent is entitled to claim investment 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 .....

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..... for manufacture of rectified spirit which did not fall in item No. 1 of the Eleventh Schedule, the investment allowance has rightly been allowed. Having heard learned counsel for the parties, we find that the export duty is a statutory liability. The liability has accrued during the assessment year in question since the respondent has been following the mercantile system of accounting. In view of the principles laid down by the apex court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 the Tribunal was justified in allowing 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 .....

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