Accrued statutory liability and revenue expenditure principles govern deductions, while Section 43B relief followed binding precedent.

An accrued statutory liability under the relevant control order was treated as deductible in the year it arose, even though liability was disputed or proceedings were pending. Deduction under Section 43B for sales tax was also allowed, the issue having been covered by binding precedent and earlier decisions in the same matter. Expenditure on installation of computer software, electrical work, and lifts was regarded as revenue in nature because business expenditure incurred to meet operational needs in a changing technological environment is not necessarily capital merely due to some enduring benefit. The Revenue's appeals therefore failed and no substantial question of law was found.

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Issues: (i) Whether the deduction claimed on account of contribution to the Drug Price Equalization Account was allowable in the relevant year despite the dispute regarding liability; (ii) Whether deduction under Section 43B of the Income-tax Act, 1961 was allowable on account of non-payment of sales tax; (iii) Whether expenditure on installation of computer software, electrical work, and lifts was revenue expenditure or capital expenditure.

Issue (i): Whether the deduction claimed on account of contribution to the Drug Price Equalization Account was allowable in the relevant year despite the dispute regarding liability.

Analysis: The liability was treated as a statutory and ascertainable liability arising under the relevant control order. A mere dispute by the assessee or the existence of pending proceedings did not defer accrual where the liability had arisen in the accounting year. The view adopted was consistent with the principle that an accrued statutory liability is deductible in the year in which it arises.

Conclusion: The deduction was allowable to the assessee in the relevant year.

Issue (ii): Whether deduction under Section 43B of the Income-tax Act, 1961 was allowable on account of non-payment of sales tax.

Analysis: The Tribunal's view was supported by earlier decisions on the same assessee and by binding precedent treating the issue as covered in favour of the assessee. The absence of payment by itself did not justify interference where the issue had already been decided consistently in the assessee's favour.

Conclusion: The deduction under Section 43B was allowable to the assessee.

Issue (iii): Whether expenditure on installation of computer software, electrical work, and lifts was revenue expenditure or capital expenditure.

Analysis: The expenditure was examined in the context of technological advancement, business requirements, and the fact that not every advantage of some durability results in capital expenditure. The Tribunal's approach accorded with the settled view that such expenditure, when incurred to meet business needs in a changing technological environment, may be revenue in nature.

Conclusion: The expenditure was held to be revenue expenditure and allowable to the assessee.

Final Conclusion: No substantial question of law arose on any of the issues, and the Revenue's appeals failed in entirety.

Ratio Decidendi: An accrued statutory liability is deductible in the year it arises notwithstanding dispute or pending proceedings, Section 43B relief depends on the governing precedent and facts of the claim, and expenditure incurred to meet business needs in a changing technological environment is not necessarily capital merely because it yields some enduring advantage.

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