2002 (8) TMI 34 - HC - Income Tax

Provision For Motor Vehicles Tax, Amount Deposited As Business Expenditure - Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the entire sum of Rs. 2,28,907 being the vehicle tax demanded by the Regional Transport Office was an admissible deduction in the computation of the assessee s income- for the assessment year 1980-81? - The apex court in the case of Kedarnath Jute Manufacturing Co. Ltd. v. CIT upheld the deduction claimed by the assessee for the amount of sales tax which the assessee was liable to pay during the relevant year and held that the fact that the assessee had taken proceedings before the higher authorities for getting the demand reduced or wiped out did not affect the right of the assessee to claim the deduction during that year. The principle laid down in that decision is attracted to the facts of this case. The question referred to us at the instance of the Revenue is therefore answered in favour of the assessee and against the Revenue.

Summary

The High Court of Madras ruled in favor of the assessee, allowing the deduction of Rs. 2,28,907 for vehicle tax demanded by the Regional Transport Office in the assessment year 1980-81. The Tribunal's decision was supported by the court's previous rulings and the Supreme Court case of Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971] 82 ITR 363, which upheld deductions claimed by the assessee even if proceedings were ongoing to reduce or eliminate the demand.