TaxTMI 
TaxTMI 
2017 (8) TMI 610
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....case, are as under : "2. The facts, in brief, are as under : For the Assessment Year 1988-89, the assessee made provision in the account amounting to Rs. 1,42,69,767/- at the rate of Rs. 115 PMT. The Assessing Officer, however, allowed royalty payable @ Rs. 60 PMT in respect of the Bamboo exploited under the 1968 agreement and at the rate of Rs. 15 PMT in respect of the Bamboo exploited under the 1947 agreement amounting to Rs. 73,56,144/-. The Assessing Officer also found that a sum of Rs. 8,55,85,000/- was outstanding against Andhra Pradesh Rayons Limited. The Assessing Officer held that interest was chargeable on the outstanding sum in view of the decision of the Supreme Court in the case of Travancore State Bank of India and since no interest was charged brought to tax the amount of interest at Rs. 1,10,81,900/- as assessee's taxable income. The Assessing Officer also found that the assessee was to receive an amount of Rs. 3,09,719/- as gross receipts in respect of technical and management services fees from the foreign partners. The Assessing Officer following the orders of earlier years brought to tax the entire sum as it was being taxed on accrual basis in the case of....
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....on'ble High Courts. 6. On the other hand, Authorised Representative for the assessee contended that the question No.1 is similar to the question referred by the Tribunal in R.A. Nos. 10, 11, 12, 13 and 14/Nag/94. As regards, the question No.2, he contended that the Tribunal rejected the reference of the identical question proposed in R.A. No.14/Nag/1994. He further contended that the similar question has already been decided by the jurisdictional High Court in favour of the assessee in the case of CIT vs. Ambalal Kilachand, 210 ITR 844 and it will be of academic nature only to refer the said question. Regarding question No.3, he contended that similar question has been referred by the Tribunal in R.A. Nos. 10 to 14/Nag/94 vide its statement of the case dated 7-7-94 referred to above. 7. We have considered the submissions of the parties and have gone through the entire material placed before us including the order of the ITAT and the decision of the jurisdictional High Court. Regarding the question No.2, the jurisdictional High Court in 210 ITR 844 has decided the similar question in favour of the assessee and, therefore, it will be of academic nature to refer the said quest....
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....to draw water from Wardha river for use in its paper factory without payment of any water rate or tax leviable in the said connection. The Government took the liability to acquire land for the purposes of paper factory at the cost of the company. The company was also asked to train five candidates every year nominated by the Provincial Government in the techniques of paper manufacturing. 3) The Governor as per para 6(i) of the 1947 agreement granted to the assessee for a period of 40 years a license to cut and remove bamboos growing in the Govt. Forests in the said district on payment of a royalty at the rate of Rs. 5 and 4 annas per tonne of Airdry bamboos containing not more than 10 % of moisture. Later on this rate was revised to Rs. 15 P.M.T. as per agreement between the two parties. The Government undertook to supply electricity and also agreed to compensate the assessee in case sufficient quantity of wood could not be secured from the Forest. It is notable that there was no escalation clause in the said agreement. 4) On the formation of the State of Maharashtra with effect from 1-11-1960 the District of Chandrapur became a part of the State of Maharashtra. On 10th of Dec.....
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....the revised rate or royalty for bamboo to be exploited by you under the 1968 agreement with effect from 1.10.1982 for a period of 5 years at an uniform rate of Rs. 230/- per ADMT for all the areas covered by the Agreement. As a special case, however, a discount of Rs. 30/- per ADMT of bamboo would be given to you, for the first year, i.e. the working season 1982-83 and a discount of Rs. 15/- per ADMT would be given for the 2nd and 3rd years, i.e. the 1983- 84 and 1984-85 working seasons. " As per para 3 of the said letter an offer was made that if the assessee agreed to the rate fixed under 1968 agreement being made applicable to the supply under 1947 agreement as a permanent agreement with effect from 1-10-1982 the Government of Maharashtra was agreeable to fix the rate of royalty for both the agreements at Rs. 200/- per ADMT from 1-10-82 to 30-9- 87. The Government also agreed to give some further discount as mentioned in para 2 of their letter. As per para 4 of the said letter it was provided that if the assessee was not agreeable to the said arrangement, the royalty under 1968 agreement would be fixed as indicated in paragraph 2 of the said letter. The State Government furt....
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....) per metric tonne of Air-dry bamboos" for the letters, figures and words Rs. 5.4.0 (Rupees Five and annas four only) per ton of Airdry bamboos" appearing in clause 6(i) of the said Agreement ; And it is hereby further ordered that the revised rate of royalty of Rs. 230/- per metric tonne of Air-dry bamboos shall not be enforced during the pendency of the writ petition No.2054 of 1983, as per the aforesaid order of the High Court. " Later on, on 5-7-91 a Memorandum of Understanding was arrived at between the State of Maharashtra and the assessee under which the following rates were agreed : Supply Year Rate/MT 1982-83 170 1983-84 185 1984-85 185 1985-86 200 1986-87 200 1987-88 220 1988-89 242 1989-90 267 1990-91 293" (b). From the above facts, it is clear that the royalty payable under the 1947 agreement for license to cut and remove bamboos was at Rs. 5/- per Air dry metric ton (ADMT) and under the 1968 agreement, the royalty was payable at Rs. 60/- per ADMT. Thereafter, the State Government i.e. the State of Maharashtra informed the Respondent/Assessee in March, 1983 that it had decided to fix the revised rate for royalty of bam....
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....h a deduction." (f). Mr.Bhattad, learned Counsel for the Revenue challenges the reasoning of the Tribunal by pointing out that liability to pay at Rs. 115/- per metric ton continues to be a contingent liability subject to the Writ Petition being decided. According to him, the fact that payment of royalty at Rs. 115/- per ADMT is made by the Respondent/Revenue to the State Government would not change the character of liability from being a contingent liability. Thus, he submits the expenditure should have been allowed only at the rates of Rs. 15/- per ADMT and Rs. 60/- per ADMT under the 1947 and 1968 Agreement respectively. Any payment in excess of the above would be contingent upon the decision of the Court in the pending Writ Petition. In support, reliance is placed under the decision of this Court in Standard Mills Co. Ltd. vs. CIT 229 ITR 366. (g) Mr.Dewani, learned Counsel for the Respondent/Assessee submits that the issue stands concluded by the decision of the Apex Court in the case of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT, (1971) 82 ITR 363 (SC) and Commissioner of Income Tax vs. Kalinga Tubes Ltd., (1996) 218 ITR 0164. (h) We find that the issue for our consider....
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....tile system of accounting could have claimed deduction for payment of central sales-tax dues for asst. yr. 1962-63 in the asst. yr. 1971-72." In fact, the Apex Court in Kedarnath Jute Manufacturing Co. Ltd. (supra) has laid down the text to ascertain whether the amount is a debt by holding that " a liability depending upon a contingency is not a debt in presenti or in futuro till the contingency happened. But if there is a debt, the fact that the amount is to be ascertained does not make it any less a debt if the liability is certain and what remains is only quantification" Applying the above text, the amount @ Rs. 115/- per ADMT is a debt. (i). The aforesaid observations of the Apex Court would apply to the facts of the present case. Reliance by the Revenue on Standard Mills Ltd. (supra) is inappropriate as the facts in that case are completely distinguishable from that at hand. In the case before the Bombay High Court in Standard Mills Ltd. there was no demand of excise duty made upon the Assessee therein which would have the effect of accrual of liability. In the above case, the assessee had only received a show cause notice, to show cause as to why a particular amount should....