JUDGMENT
B.N. Kirpal, J.
1. The petitioner seeks reference of the following two questions to this court :
“(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in confirming that a contingent liability which is not acknowledged even as a debt by the assessed qualifies for deduction under the Income-tax Act ?
(2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the principles laid down by the Supreme Court in the case of India Molasses Co., Pvt. Ltd., [1959] 37 ITR 66 are not applicable to this case and the case is covered by the principles laid down in Kedarnath Jute Mfg. Co., Ltd., [1971] 82 ITR 363 (SC) by ignoring the material fact that excise duty in this case is neither determined nor owed as a debt by the assessed but is merely a contingent liability not provided for in the books of account ?”
2. It appears that carbon paper was subjected to excise duty under item No. 68. An amendment was brought about in item No. 17 by Finance Act of 1976 whereby coated paper was regarded as paper. Previously, carbon paper was being subjected to general excise levy of one per cent. ad valorem under item No. 68. On October 29, 1979, the Collector of central Excise issued a general trade notice stating that carbon paper will be liable to be classified as coated paper under item No. 17(2). The assessed was required by the excise authorities to clear the goods under this item. The assessed, however, did not accept this classification as it contended that carbon paper was not coated paper at all. On March 11, 1980, a show-cause notice was issued requiring the assessed to show cause as to why the approval of the classification of carbon paper under item No. 68 should not be withdrawn with effect from March 16, 1976. A reply to the same was sent and thereafter the assessed received a letter dated April 21, 1980, in the from of a demand notice for payment fo basic excise duty and special excise duty for the years 1976-77 to 1979-80. The total amount of duty demanded was Rs. 92,98,805.
3. The assessed filed a revised return claiming this amount as a deduction. It also filed a writ petition in this court, being Civil Writ No. 634 of 1980, challenging the levy of excise duty under item No. 17(2). The amount of duty charged under item No. 17(2) was at 40% ad valorem but, according to the assessed, it was liable to pay at eight per cent. ad valorem.
4. The Income-tax Officer disallowed the claim of the assessed in respect of the assessment year 1980-81. The disallowance was on the ground that only a show cause notice had been issued. In respect of the year 1981-82, with which the present petition is concerned, it was observed by the Income-tax Officer that as the assessed maintains the mercantile system of accounting, the claim for earlier years is normally inadmissible this year. He further held that, in the instantcase, the liability had arisen this year and the same would have been allowed if the said liability was in present and not in future. The reason for so holding was that “the liability which the assessed has claimed this year, in view of the pending writ is, for the time being, only contingent”.
5. The Income-tax Officer referred to the decision of the Supreme Court in the case of CIT v. Indian Molasses Co., P. Ltd., [1970] 78 ITR 474 and Indian Molasses Co., Pvt. Ltd. v. CIT [1959] 37 ITR 66 for the proposition that the liability had not accrued and it was not a liability at the present time.
6. An appeal was filed against the said decision and the Commissioner of Income-tax allowed the claim of the assessed. Further appeal was filed to the Tribunal and the Tribunal, following the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co., Ltd. v. CIT [1971] 82 ITR 363, came to the conclusion that the said amount was allowable as a deduction.
7. The petitioner thereafter filed an application under section 256(1) but the same was dismissed. It is thereafter that the present application has been filed.
8. It is first contended by counsel for the petitioner that, in view of the decision of this court in CIT v. Mohan Meakin Breweries Ltd., [1989] 175 ITR 78, a question of law should be directed to be referred. In that case, this court was concerned with the allowability of an item known as “additional excise duty”. The court came to the conclusion that a question of law did arise because “the very nature of additional excise duty is in question”. This was because whether additional duty was in the nature of a penalty or not had to be considered. If it was in the nature of a penalty, then the court seemed to be of the opinion that it may not be allowable as a deduction.
9. In the present case, however, the question of additional excise duty does not arise. The claim of the Excise Department arises because of the classification of carbon paper. Earlier, excise duty had been paid under item No. 68 but the claim of the excise authorities raised for the first time in 1979 was under item No. 17. Mohan Meakin Breweries’ case [1989] 175 ITR 78(Delhi) is, therefore, clearly distinguishable and has no application to the present case because the allowability of this item is not in dispute. Even the assessing authority had said that the excise duty claimed by the Excise Department is allowable as a deduction. But in Mohan Meakin’s case [1989] 175 ITR 78 (Delhi) it was doubtful whether the item was allowable as a deduction or not. In this case, the only dispute is whether it is allowable for the assessment year 1981-82 or in any other assessment year. This was not the case which arose before this court in Mohan Meakin’s case [1989] 175 ITR 78.
10. In Kedarnath Jute Mfg. Co., Ltd.’s case [1971] 82 ITR 363 (SC), it has been conclusively stated by the Supreme Court that whether an assessed is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessed might take of his right; nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. In that case, the sales tax which was demanded was disputed and no entry was made in the books of account of the assessed. Never the less, deduction was allowed as it was held that the amount of sales tax payable was allowable which had come into existence even though the same may have been disputed. The only ground on which the assessing authority had disallowed the deduction was that a writ petition had been filed challenging the demand of excise duty. In view of the decision of the Supreme Court in Kedarnath Jute Mfg. Co., Ltd.’s case [1971] 82 ITR 363, the reference in the present case to the filing of the writ petition was completely misplaced.
11. It is then sought to be contended by counsel for the petitioner that, in any event, as the allowability of excise duty related to the years 1976-77 to 1979-80, the same was not allowable as a deduction in the assessment year 1981-82.
12. There is no merit in this submission. Firstly, we are unable to agree with counsel for the petitioner that any such objection was raised by the inspecting Assistant Commissioner. This is evident from the fact that the Inspecting Assistant Commissioner himself stated that this liability would have been allowed as a deduction in this year if the writ petition had not been filed. We are also unable to agree with learned counsel for the petitioner that this point was ever raised or considered by the Tribunal. It is contended that the Tribunal has stated that the ground of the petitioner is that the Commissioner of Income-tax (Appeals) had erred in allowing the excise duty liability of Rs. 92,98,805 pertaining to the assessment year prior to the assessment year 1981-82. From this, it is sought to be contended that it was argued before the Tribunal that the deduction could be claimed only in the earlier assessment years. We find no merit in this submission. Merely because the liability pertained to the earlier years, it does not mean that it had arisen in the earlier years and not in the present year. It is now where mentioned in the order of the Tribunal that there was a contention raised that the deduction was allowable only in the years relevant to the assessment year 1976-77 to 1979-80. Indeed, this contention could not have been raised for another very valid reason. It is in respect of the accounting year 1979-80 that there was an excise demand of Rs. 21,74,258.20. This excise demand for 1979-80 would be relevant to the assessment year 1980-81 under the Income-tax Act. The Income-tax Officer, in respect of the assessment year 1980-81 has disallowed the claim under this head. If the contention of Mr. Gupta is correct and if this was the view which was taken by the Inspecting Assistant Commissioner, then he would have allowed the sum of Rs. 21,74,258.20 in the assessment year 1980-81. This shows that, as is evident from the order in question, the reason for disallowance was only one, namely, the filing of the writ petition. It is only this contention which was reagitated before the Tribunal and also in the application under section 256(1) of the Act. We do not find any contention or submission raised to the effect that the Tribunal has not dealt with the question of allowability of this deduction in the earlier years.
13. Even the questions which have been framed do not pertain to this. It is true that this court can reframe a question of law but a question of law cannot be so reframed as to make it a completely new question which has not been sought to be referred or which does not arise from the order of the Tribunal. The contention now sought to be raised by Mr. Gupta, that the deduction was allowable only in the earlier years does not, in our view, arise from the Tribunal’s order.
14. In our opinion, there is no merit in this petition because the questions of law proposed are academic and the answer to the same is self-evident in view of the decision of the Supreme Court in the case Kedarnath Jute Mfg. Co., Ltd., [1971] 82 ITR 363.
15. This petition is, accordingly, dismissed. There will be no order as to costs.