IMPORTANT POINT
If the Revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one assessee, then it is not open to the Revenue to challenge its correctness in the case of other assessees, without just cause.

JUDGMENT

Srikrishna, J.-Leave granted.

2. The assessee is a company engaged in the manufacture and sale of paints, varnishes and other allied products. During the previous year ending on 31st December 1983 pertaining to the assessment year 1984-85, the petitioner in its returns had disclosed a sum of Rs. 1,33,31,370/- as income. During this period, the appellant-assessee had incurred expenditure on account of customs and excise duty aggregating to Rs. 5,85,87,181/-, which was duly debited to the Profit and Loss Account of the petitioner for the relevant previous year and was also fully paid during the relevant previous year. In addition thereto, the petitioner had also credited to the Profit and Loss Account of the relevant previous year and amount of Rs. 98,25,833/- relatable to the customs and excise duty on the closing stock of inventory by including the said sum in the valuation of such closing stock. During the assessment proceedings for the assessment year 1984-85, the appellant-assessee claimed that under Section 43B of the Income Tax Act, 1961 (hereinafter referred to as the Act ) that it was entitled to deduction of the entire sum of Rs. 5,85,87,181/- being the duties actually paid during the relevant previous year.

3. On similar basis, the appellant-assessee had claimed a deduction of an amount of Rs. 1,22,54,261/- being the actual customs and excise duty included in the value of the closing stock for the previous year pertaining to the assessment year 1986-87 and offered for tax a sum of Rs. 98,25,833/- being customs and excise duty included in the value of the opening stock. Similarly, for the assessment year 1986-87, the petitioner claimed a deduction of Rs. 24,28,428 [Rs. 1,22,54,261 - Rs. 98,25,833]. The assessee claimed a deduction of Rs. 77,81,739 [Rs. 2,00,36,000 - Rs. 1,22,54,261] on similar basis for the assessment year 1987-88.

4. In the assessment proceedings of the assessment year 1984-85, the Inspecting Assistant Commissioner of Income Tax allowed the appellant-assessee s claim that it was entitled to deduct the entire sum of Rs. 5,85,87,181/- being the duties actually paid during the relevant year previous to the assessment year 1984-85. The Commissioner of Income Tax initiated proceedings under Section 263 of the Act on the ground that the Assessing Officer had wrongly allowed the claim for deduction of an amount of Rs. 98,25,833/- towards customs and excise duty paid during the previous year but credited to the Profit and Loss Account in closing stock of goods under the provisions of "Section 43B. The assessee relied upon the judgment of the Gujarat High Court in Lakhanpal National Ltd. v. ITO, [1986] 162 ITR 240 (Guj.) [hereinafter referred to as "Lakhanpal National Ltd. s case"] in support of its claim. The Commissioner of Income Tax took the view that the Gujarat High Court s decision was distinguishable on facts and, therefore, made an order under Section 263 of the Act disallowing the claim of the assessee. On appeal to the Tribunal, the Tribunal held that the Gujarat High Court s judgment in Lakhanpal National Ltd. s case was distinguishable and confirmed the order of the Commissioner of Income Tax. On an application made under Section 256(1) of the Act at the instance of the appellant-assessee, the Tribunal inter alia referred the following question of law for the opinion of the High Court:-

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in rejecting the assessee s claim for deduction of the excise and customs duties of Rs. 98,25,833/- paid in the year of account and debited in the Profit & Loss Account, on the ground that the crediting of the Profit & Loss Account by the value of the closing stock, which included the aforesaid duties, did not have the effect of wiping out the debit to the Profit & Loss Account?"

5. The High Court by its judgment dated 24th September 2001 in ITR No. 213 of 1993 answered the question referred in favour of the Revenue an