2013 (12) TMI 1315 - HC - Income Tax

Taxability of reimbursement of excise duty - Held that - this amount has not been debited in the P & L A/c, and it was only balance sheet entry which reflected this amount - The Excise Duty was never charged from the Govt. Department to whom the goods were supplied by the appellant - On the removal of goods from the premises of the appellant, Excise duty was kept by the appellant as per the requirement from the concerned Government Department in lieu of Central Excise Duty paid earlier - In the net result, the appellant was not in receipt of any amount from the Government Department to whom goods were sold - Decided against Revenue.

Summary

Issues involved:
1. Interpretation of Income Tax Act, 1961 regarding addition of excise duty receivable.
2. Validity of Tribunal's decision in deleting the addition of excise duty receivable.

Detailed Analysis:
Issue 1: The appeal raised the question of whether the ITAT was justified in deleting the addition of excise duty receivable, as per the Income Tax Act, 1961. The Tribunal confirmed the appellate order, which was challenged in this case. The appellant argued that the excise duty amount was not debited in the profit and loss account and was received on account of reimbursement. The CIT (A) considered the submissions and found that the appellant was not in receipt of any amount from the Government Department to whom the goods were sold, as the excise duty was kept by the appellant in lieu of central excise duty paid earlier. The Tribunal reasoned that the addition made by the Assessing Authority was not justified, as the excise duty was received as a reimbursement and not debited in the profit and loss account.

Issue 2: The Court analyzed the reasoning provided by the Tribunal in deleting the addition of excise duty receivable. The Tribunal considered that the appellant reimbursed the excise duty from the Government Department and was not in receipt of any amount from the department to whom the goods were sold. The Court found no error in the Tribunal's reasoning and upheld the decision in favor of the respondent-assessee. The Court dismissed the Income Tax Appeal, affirming the Tribunal's decision and rejecting the revenue's claim.

In conclusion, the High Court upheld the Tribunal's decision in deleting the addition of excise duty receivable, as the excise duty was received as a reimbursement and was not debited in the profit and loss account. The Court found the reasoning provided by the Tribunal to be valid and ruled in favor of the respondent-assessee, dismissing the Income Tax Appeal.