2016 (11) TMI 716

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....of the case, the Tribunal is right in law in allowing the appeal of the assessee by directing to delete the addition of Rs. 91.54 lac disallowed by the Assessing Officer on the ground that the liability was not ascertained and is in the nature of contingent liability?". At that time, the Court directed that this Appeal should be heard along with Income Tax Reference No.320 of 1998. 3. We have on 1st April, 2016 heard both - Income Tax Reference bearing No. 320 of 1998 and the present appeal. The question of law posed for our opinion in the Income Tax Reference No. 320 of 1998 reads as under: "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in setting aside the order of the Commissioner of Income ....

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....her amount of Rs. 91.54 lakhs being payable as Custom Duties. However, M/s. Vinay Industries issued an invoice for an amount of Rs. 91.54 lakhs (Addl. Customs duty liability) to the Respondent-Assessee. (b) It appears that M/s. Vinay Industries, thereafter, withdrew its challenge to the increase in the levy of Customs Duty filed before the Supreme Court. This led the Respondent-Assessee to file a Civil Suit in the Ludhiana Civil Court, disputing its liability to pay the additional Customs Duty of Rs. 91.54 lakhs to M/s. Vinay Industries. Nevertheless, the Respondent-Assessee claiming to follow a Mercantile System of Accounting, debited an amount of Rs. 91.54 lakhs as its expenditure towards purchase of Synthetic Waste from M/s. Vinay Indus....

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....as agreed to supply to the buyer, but in case at some later stage, any such liability occurs and any duty is required to be paid, the same too, will be the exclusive liability of the Buyer as the same will be nothing but a part of the cost and for this purpose, the buyer has undertaken to stand guarantee in any manner acceptable to the customs or the Bank to the effect that in case any such duty becomes payable at any stage, the same will be the exclusive liability of the buyer and not that of the seller by virtue of this Agreement." (b) While the clause of the agreement between the Respondent-Assessee and its seller i.e. M/s. Vinay Industries which arises for consideration in the subject Assessment Year reads as under:- "Whereas, as a r....

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....impugned order dated 13th December, 2007 holding itself bound by its order dated 17th July, 1989 passed in respect of Respondent-Assessee for the Assessment Year 1985-86. 10. We find that the Tribunal in passing the impugned order has not considered the different fact-situation in the Assessment Year 198687 from that existing in Assessment Year 198586. This difference is in the clauses of the agreements as well as the fact of the Respondent-Assessee disputing its liability to pay the Customs duty of Rs. 91.54 lakhs to M/s. Vinay Industries by filing a Civil Suit in the Court of Ludhiana. This dispute between the seller and the Respondent-Assessee existing in the Assessment Year 198687 is totally absent during the Assessment Year 1985-86. ....