Satish Chandra, C.J.
1. The assessee is a private limited company and carries on the business of manufacture and sale of sugar. It had acquired on rent an area of 96 acres, on which it built its factory, etc. In the assessment year 1970-71, it claimed an expense of Rs. 77,000 by way of rent payable for the 96 acres of land and taxes. In support of the claim itrelied upon an award dated 5th March, 1969, under which the company agreed to pay Rs. 77,000 to the owners on account of rent for the last 10 years at the rate of Rs. 50 per bigha for 96 acres of land held by the company. The ITO repelled this claim. On appeal, the same was accepted by the AAC. The revenue went up to the Tribunal. The Tribunal held that the assessee was maintaining its accounts on mercantile system. The liability to pay rent accrued year to year. The fact that the assessee paid rent for the last 10 years in a lump sum during the current year was irrelevant. The Tribunal also observed that the assessee has not disclosed as to what was the nature of the dispute between the assessee and the owners of the land and what were the allegations and counter-allegations which were made in the civil suit alleged to have been filed. From the letter written by the assessee to the ITO, to which the award was affixed, it was apparent that the amount had been paid as lease rent for the last ten years to the owners of the land 'as per terms of the lease deed'. It is, thus, clear that the amount was paid as rent under the subsisting deed of lease for the preceding 10 years. It is not the assessee's case that the lease deed stood suspended or extinguished for the 10 years, for which period the assessee had paid Rs. 77,000. The character of the payment was rent. The system being mercantile, it was evident that the liability accrued in each of the years for which the payment was made now. The liability hence could not be deemed to be postponed just because there was some difference of opinion as regards the quantum of the rent. In our opinion, the Tribunal took a perfectly correct view.
2. At the instance of the assessee the Tribunal has referred the following question of law for our opinion :
'Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim a deduction of lease rent of Rs. 77,000 paid in the accounting period ending on 31st October, 1969, for the assessment year 1970-71?'
3. In view of what we have said above, the question referred to us is answered in the negative, in favour of the department and against the assessee. The Commissioner would be entitled to costs, which are assessed at Rs. 200.