[1] The substantial question No.1 is answered in favour of the Revenue and against the Assessee and we hold that the “distribution of surplus” by the Assessee CHAMUNDI WINERY AND DISTILLERY to DIAGEO INDIA PRIVATE LIMITED in pursuance of the Agreement dated 30/10/2007 was an “application of income” by the Assessee CHAMUNDI and the same was not an ‘allowable expenditure’ under Section 37 of the Income Tax Act of 1961. [2] The substantial question No.2 is also answered in favour of the Revenue and against the Assessee and we hold that the terms and conditions of the Agreement dated 30/10/2007 between CHAMUNDI WINERY AND DISTILLERY and DIAGEO INDIA PRIVATE LIMITED did not amount to “diversion of income at source by overriding title” in favour of DIAGEO INDIA PRIVATE LIMITED because, the entire business under Excise licence in favour of the Respondent Assessee CHAMUNDI was in fact carried on by CHAMUNDI only and the profits and gains arising out of such business were liable to tax in the hands of the Assessee CHAMUNDI WINERY AND DISTILLERY. [3] The substantial question No.3 is also answered in the following manner that the manner of accounting entries and the Method of Accounting in the Books of Accounts maintained by the Assessee CHAMUNDI WINERY AND DISTILLERY as well as DIAGEO INDIA PRIVATE LIMITED will not alter and determine the taxability and character of “real income” arising and accruing in the hands of the Assessee CHAMUNDI WINERY AND DISTILLERY in the presentcaseand irrespective of any change of Method of Accounting, in all the Assessment Years in the present Appeals, the income from business of manufacture and sale of Liquor will be taxable in the hands of the Assessee CHAMUNDI WINERY AND DISTILLERY. 79. The present Appeals of the Revenue are thus allowed with no order as to costs