Law:

Section:

I. Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1993-94 - Whether furnishing of a bank guarantee in respect of any sum payable by an assessee can be equated with actual payment as required under section 43B for allowance as deduction in computation of profits - Held, no - Whether bottling fees payable for acquiring a right of bottling of IMFL, which is determined under Excise Act and Rules, is neither fee nor tax, but is consideration for grant of approval by Government in respect of exclusive right to deal in bottling of liquor in all its manifestations - Held, yes - Whether, therefore, bottling fee payable under Excise Law for acquiring a right of bottling of IMFL does not fall within purview of section 43B - Held, yes II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1993-94 - Revenue filed an appeal against order of Tribunal holding that payment of technical service charges was allowable based on subsequent agreement dated 10-4-1992 at a higher rate than that based on earlier agreement entered into in December, 1990, even though said earlier agreement was to be effective up to 2000, and had neither been substituted nor rescinded - Assessee contended that though in two years payments made under new agreement were more than what would have fallen due under original agreement, but for subsequent years' transactions, business expediency claim of assessee proved to be right - High Court recorded a finding that new agreement entered into in April, 1992 was not a subterfuge or a clandestine device to reduce tax liability, but was an expenditure incurred on business expediency and decision of parties to enter into new agreement was based on commercial considerations - High Court, therefore, upheld order of Tribunal - Whether there was any infirmity in decision of Tribunal and High Court to warrant interference - Held, no JUDGMENT Dr. Arijit Pasayat, J. - Questioning correctness of the judgment rendered by a Division Bench of the Rajasthan High Court at Jodhpur, this appeal has been filed. The questions raised before…

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