Discharged That The Deduction Could Be Claimed. Such Concurrent View Should Not Have Been Held To Be Perverse And Should Not Have Been Interfered By The Tribuna v. The Tribunal In The Instant C

kps IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.63 OF 2012WITHINCOME TAX APPEAL (LODGING) NO.2457 OF 2006WITH INCOME TAX APPEAL (LODGING) NO.2456 OF 2006 The Commissioner of Income Tax. ..Appellant -Versus-M/s Geoffrey Manners and Co. Ltd.. ..Respondent ........... Mr.Suresh Kumar, for the Appellant.Mr.P.J.Pardiwalla, Senior Advocate with Mr.Atul K. Jasani, for the Respondent. ........... CORAM: S.C. DHARMADHIKARIAND B.P. COLABAWALLA, JJ. DATE :- 27[th] June, 2014 P.C.: 1These Appeals by the Revenue challenge the orders passed by the Income Tax Appellate Tribunal which have been delivered on 30.09.2005. 2In Income Tax Appeal (Lodging) No.2456/2006 the Assessment Year in question is 1985-1986 whereas in Income Tax Appeal No.63/2012 the Assessment Year is 1986-1987. The three questions out of which questions (1) and (2) are common to both Appeals read as under:- (i)Whether on the facts and in the circumstances of the case and in law, was the Tribunal right in allowing deduction for in law, was the Tribunal right in allowing deduction for *2*itxa.63.12.2457.2456.06.con.901 (ii) (iii) provision made on account of liability towards contribution to Drug Price Equalization Account (DPEA), ignoring the fact that the liability being a mere provision was contingent in nature had not crystallized during the Previous Year? Whether on the facts and in the circumstances of the case and in law, was the Tribunal right in allowing deduction u/s 43B on account of non payment of Sales Tax? Whether on the facts and in the circumstances of the case and in law, was the Tribunal right in holding that expenses incurred on installation of computer software, expenses on electrical work and expenses on installation of lifts fall within the ambit of revenue expenditure, ignoring the fact that these expenses contributed towards achieving enduring benefits? 3It is submitted by Mr.Suresh Kumar, learned counsel appearing for the Revenue, that the Tribunal committed grave and serious error of law in allowing deduction for the provision made on account of liability towards contribution to Drug Price Equalization Account (DPEA). This is ignoring the fact that the liability is mere provision which was contingent in nature and it has not been crystallized during the previous year because the Assessee approached the Delhi High Court challenging the stipulation in the Drug Price Control Order. There was interim stay in favour of the Assessee. Eventually that Writ Petition was allowed. The order of the Delhi High Court was challenged in the Honourable Supreme Court by the Revenue and the Revenue succeeded. The Assessing Officer and the Commissioner concurrently held that the Assessee was entitled to the deductions only in the year in which the liability was actually accruing and the amount was payable. Since there was interim stay the Authorities took the view that as and when the liability is actually incurred or *3*itxa.63.12.2457.2456.06.con.901 discharged that the deduction could be claimed. Such concurrent view should not have been held to be perverse and should not have been interfered by the Tribunal. 4In relation to this question it is submitted by Mr.Pardiwalla, learned Senior Counsel appearing for the Assessee, that the Tribunal has not committed any serious and grave error of law as projected. The Tribunal has in accepting the stand of the Assessee concluded that the liability is for contribution to the Drug Price Equalization Account. The Assessee may have disputed the liability insofar as this contribution, however, the liability is clearly ascertainable one. There was no stay against accrual of the liability under clause 7(2) of the Drug Price Control Order. This being a statutory liability it is allowable in the year in which it arises irrespective of whether the Assessee disputes it or accepts the same. 4In relation to this question it is submitted by Mr.Pardiwalla, learned Senior Counsel appearing for the Assessee, that the Tribunal has not committed any serious and grave error of law as projected. The Tribunal has in accepting the stand of the Assessee concluded that the liability is for contribution to the Drug Price Equalization Account. The Assessee may have disputed the liability insofar as this contribution, however, the liability is clearly ascertainable one. There was no stay against accrual of the liability under clause 7(2) of the Drug Price Control Order. This being a statutory liability it is allowable in the year in which it arises irrespective of whether the Assessee disputes it or accepts the same. 5Mr.Pardiwalla submits that this is the consistent view and which also finds favour not only in the case of the Assessee, but in the case of M/s Glaxosmithkline Pharmaceuticals Limited. Mr.Pardiwalla places reliance on the order passed by the Division Bench of this Court on 05.03.2012 in Income Tax Appeal No.972/2009 (Commissioner of Income Tax v/s M/s Glaxosmithkline Pharmaceuticals Ltd.). He submits that the issue was answered in favour of the Assessee and against the Revenue. Our attention has been invited to paragraph 5 of this order and it is submitted that in relation to M/s Glaxosmithkline the Tribunal took the same view. That was for the Assessment Year 1984-1985. That order of the Tribunal dated 10.03.2006 had attained finality. The Tribunal followed its own decision in the case of M/s Glaxosmithkline for previous Assessment Years 1982-1983 and 1983-1984. These decisions have also been held as final. 6The Tribunal in the instant case has followed the judgment of the Honourable Supreme Court in the case of Kedarnath Jute Manufacturing Company Limited reported in 82 ITR 362 (SC). In view thereof and finding that the Tribunal's order is in consonance with the facts and circumstances of the case, so also, the statutory liability having been created in the year in question and which has no bearing on the pending proceedings initiated by the Assessee or the dispute raised therein that we find that this question cannot be termed as substantial question of law. 7In relation to the second question, namely, deduction under Section 43B on account of non payment of sales tax, the Tribunal has held in favour of the Assessee by observing that the liability in relation thereto was also an issue raised for Assessment Year 1984-1985 in Income Tax Appeal No.4160/B/1988. We find that the Tribunal answered that issue in favour of the Assessee for that Assessment Year. Two Appeals which have been brought before us by the Revenue pertain to the Assessment Years 1985-1986 and 1986-1987. The Tribunal also had before it the Appeals pertaining to the Assessment Years 1983-1984 and 1984-1985. The Revenue surprisingly does not question the common order of the Tribunal for these years. Further, we find that a Division Bench of this Court had, in the Application being Income Tax Application No.10/2002 in the case of the present Assessee itself, dealt with an identical issue. The Tribunal deleted the addition of Rs.35,77,955/- made under Section 43B on account of non payment of sales tax. In relation to that question the Division Bench in the order passed on 13.12.2005 in Income Tax Application No.10/2002 held that the matter or question stands covered in favour of the Assessee by the judgment of the Division Bench of this Court in the case of Commissioner of Sales Tax v/s Empico Traders reported in 47 Sales Tax Cases 426. In these circumstances we do not find that the Tribunal committed any error or perversity in granting the claim of the Assessee. 8In fact an identical issue was raised before this Court recently in Income Tax Appeal No.5794/2010 (Commissioner of Income Tax v/s Hindustan Lever Limited) decided on 01.04.2014. There, following the judgment in the case of this very Assessee, namely, judgment referred to in Income Tax Application No.10/2002 dated 13.12.2005, it was conceded before this Court by the Department that the question will have to be decided against the Revenue and in favour of the Assessee. 9For these reasons we do not find that the question No.2 can be said to be substantial question of law. 10The last question is pertaining to expenses incurred on installation of computer software, expenses on electrical work, expenses on installation of lifts and whether the same is revenue expenditure. 11Mr.Suresh Kumar submits that the Tribunal could not have held it to be the revenue expenditure in the light of enduring benefits. 12In relation to this the Tribunal in the impugned order observed that there is room for certain flexibility in the views taken from time to time. The Assessee in such cases installs the computers. This technology is now said to be acceptable in changing world. The rapid advancement of research also contributes a small degree of endurability, but that by itself does not mean that the expenses incurred cannot be revenue in nature. Since technology advancement is an aspect which must be taken judicial note of, so also, machinery becoming obsolete that there is necessity of acquiring further technology. This is to meet the growing competition and considering trends in the market. Therefore, such expenditure will have to be treated as revenue expenditure. This decision of the Tribunal for the present Assessment Years also is in accord with its earlier decisions which are referred to in paragraph 14 of the order under challenge. 13Further, in the case of Commissioner of Income Tax v/s Raychem RPG Ltd. reported in (2012) 346 ITR 138 (Bom.), a Division Bench of this Court held that similar view of the Tribunal in the case of that Assessee cannot be said to be perverse or vitiated by any error of law apparent on the face of record. This Court approved the findings of the Tribunal in favour of the Assessee-Raychem RPG Limited. The expenditure referred to by the Division Bench is identical. The view taken, therefore, in the case of the present Assessee is in accord with the settled principles and advancement in technology and judicial notice of which has been taken by this Court. 14For the reasons afore-stated even the third question cannot be said to be a substantial question of law. 15As a result of the above discussion we do not find any merit in these Appeals. They are, accordingly, dismissed. No costs. (B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)