TaxTMI 
TaxTMI 
2019 (4) TMI 685
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....llowed, as enhanced licence fee for the relevant year, was impermissible and ought not to have been allowed deduction in view of Section 43B(a) of the Income Tax Act. The facts of the present case are identical to the batch of appeals decided by this court and applicable to A.Y. 1997-98; 2002-03; 2004-05 and 2009-10 [Jagdish Prasad Gupta v. Commissioner of Income Tax, (2017) 397 ITR 578 (Del)]. 2. The necessary facts of the case are that the assessee was allotted lands by the Northern Railways in 1975; the Railways revised the licence fee on various dates and in periodical intervals - for instance 08.02.1980; 23.03.1988; 28.03.1990 and subsequently again on 20.01.1999 and even on later dates. The Northern Railways also resorted to enhanc....
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....never raised in the previous batch of appeals. This court notices that in that batch, in addition, the reassessment proceedings were the subject matter of inquiry which means that at the AOs level as well as before the lower appellate authorities, in the first round, Section 43B was never invoked. Likewise, that provision was not invoked even in re-assessment proceedings. On an application of principles generally, which controlled Section 41(1), the court adjudicated as follows : "41. Turning to the facts of the present case, the undisputed fact is that the Assessee is following the mercantile system of accounting. It has to book the liability in the year in which it arises irrespective of whether it in fact discharges the liabilit....
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....ce to avoid unnecessary litigation thereby not causing losses of revenue to the railway administration under these circumstances and ensuring prompt and regular payment of licence fee by licencees." Also the EO ends the order by stating: "The applicant is free to revise the licence fee in accordance with the provisions of law and as per terms of agreement." 44. The order of the EO read in the correct perspective, requires the Northern Railway to follow the due process of law by giving a hearing to those adversely affected by the upward enhancement of liability before a decision is taken. Mr. Manchanda's characterisation of the said order, as negating the liability to pay the enhanced licence fee for all times to come does not flow ....
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.... this inconsistency in its claim is a plausible one. It does not deter from the position that being an accrued liability the enhanced licence fee can be claimed by it as a deduction in the year in which such liability arose. 47. In the arbitration proceedings, the claim of the Railways includes the claim for the enhanced licence fee as well as the arrears. The arbitration proceedings could end either in favour of the Railways or the Assessee. If it goes in favour of the Assessee it would then have no liability to pay such enhanced licence fee and in the year in which such final decision is rendered, the corresponding reversal of entries will have to take place in terms of Section 41(3) of the Act. All of this, in no way, extinguish....
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....d by it. He also submitted that Section 43B(1)(g) - inserted w.e.f. 01.04.2017 was in truth by way of a clarification and ought to have been read as part of the statute in the beginning itself. The amendment provision was an amplification of the existing Section 43B(1)(a). This court is of the opinion that given the reasoning in the main judgment in Jagdish Prasad Gupta (supra), no question of law can be said to arise at all. As far as the so called additional ground sought to be urged is concerned, the court is frankly taken aback by the cavalier approach by the appellant/Revenue. We say this consciously because as noticed earlier in all the previous proceedings for the previous years, Section 43B was not pressed into service as a disallow....