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TMI Blog2014 (2) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... s and loans made to the parties." 2. In support of the order of the CIT(A), the assessee has filed the Cross Objection. Accordingly, the appeal and the Cross Objection are being adjudicated. 3. The first ground relates to the deletion of addition of Rs.51,68,488/-. In this regard, the facts borne out from the record are that the assessee is a company engaged in manufacturing and trading of fruits and vegetable (powder) items and Agarbatti. During the year under consideration, the Assessing Officer has noted that the purchases have been debited exclusive of Excise Duty in purchase account and the assessee has not charged any excise on sales but has been debited in the profit & loss account. Accordingly, the Assessing Officer proposed to make disallowance of Excise Duty amounting to Rs.51,68,488/- and in response to the questionnaire raised to the assessee, it was stated that purchases have been debited exclusive of Excise Duty in purchase account. The assessee has not charged any excise on sales as per legal opinion of its excise consultants but excise authorities are imposing Excise Duty which have been paid by the assessee from his pocket and the same has been debited in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee, the CIT(A) has deleted the addition following the judgment of the Apex Court in the case of Bharat Earth Movers vs. CIT [2000] 245 ITR 428 (SC). 5. Aggrieved, the Revenue has preferred an appeal before the Tribunal and placed heavy reliance upon the order of the Assessing Officer. 6. The learned Counsel for the assessee, on the other hand, besides placing reliance upon the order of the CIT(A) has invited our attention that agreeing with the contention of the assessee the CIT(A) Shri B. P. Singh has accepted the contention of the assessee and deleted the addition made in this regard. But after taking over the charge as CIT (Administration), the same officer has recommended the case for filing an appeal before the Tribunal against his own order without assigning any reason as to under what circumstances he has changed is views. It was further contended on behalf of the assessee that though he was not required to pay the Excise Duty over sale of items as it was exempt but in order to run his business smoothly and without any hurdle from the Excise Department, a decision was taken to pay the Excise Duty under protest. Since the assessee has incurred revenue expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and submissions of the appellant. It is clear that there was no dispute that the liability which has been charged to the Profit & Loss account has been paid by the appellant. I have gone -through the challan of payment of Excise Duty and also copy of relevant Excise record bearing No. 104 to 137 of the paper book of the appellant filed before me. As against the position taken by AO of not charging Excise Duty, same is not tenable because the liability is a settled liability of the appellant. It is a liability duly quantifiable and ascertained on expert accounting principle. It was not a contingent liability but affirmed and determined liability to be discharged by the assessee. Earlier on the same pattern the Excise Duty was allowed by assessee in the case of Bharat Earth Movers vs. CIT (2000) 245 ITR 428 (SC) at page 61 of paper book. Following the guidelines available on the difference between a provision and reserve in a decision in bonus law in Metal Box Co. of India Ltd. v. Their Workmen, provision for encashment of unavailed leave was held not to be a contingent liability was allowed by the Supreme Court in Bharat Earth Movers v. CIT in followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has deleted the addition. The relevant observations of the CIT(A) are extracted hereunder: "14. I have considered the facts and circumstances of the case and submissions of the appellant. It is on record that - (a) the assessee was having share capital which is at Rs.3,01,000/-. Reserve and Surplus which is at Rs.5,983/-. Value of closing stock at Rs.82,53,955/- as well as amount available against turnover of Rs.4,21,52,959/-. (b) co-relation between advances and the loan, feeding fund is essential for the purpose of establishing that liability of interest on loan has been undertaken for non business purpose, which is not the case here. (c) advances in question to the parties were for the purchase of industrial item. The transactions were genuine and bonafide. The Lucknow Bench of ITAT in the case of Meenakshi Synthetics Pvt. Ltd. vs. ACIT 84 ITD 563 has held that non charging of interest on loan given by an assessee company by itself is not a sufficient ground for disallowing interest paid by the assessee on the loans taken by it in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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