2001 (3) TMI 20 - HC - Income Tax

Summary

Issues:
1. Whether deduction for excise and customs duty paid is allowable u/s 43B of the Income-tax Act, 1961?
2. Whether deduction for staff sports and welfare expenses is allowable u/s 40A(9) of the Income-tax Act?

Judgment Summary:

Issue 1:
The appeal involved the deduction claimed by the assessee for excise and customs duty paid during the accounting year relevant to the assessment year 1985-86. The Assessing Officer disallowed the deduction, stating it was not debited to the profit and loss account or included in the value of closing stock. The Tribunal allowed the appeal, citing precedents and confirming the actual payment made by the assessee. The High Court agreed with the Tribunal's findings, emphasizing that such deductions are allowable if paid and included in closing stock, as per relevant judgments. Therefore, the first question was answered in favor of the assessee.

Issue 2:
Regarding the disallowed deduction of staff sports and welfare expenses under section 40A(9), the Department contended that the amount constituted contribution to a club. However, the Tribunal found that the amount represented reimbursement of expenses incurred by a society for staff welfare activities, not falling under section 40A(9). As the Tribunal's finding was based on facts, the High Court held that no substantial question of law arose, and the answer to question 2 was in favor of the assessee.

In conclusion, the income-tax appeal was disposed of with no order as to costs.