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TMI Blog2010 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... t payment against the excise duty demand raised by the excise authorities and since it was a statutory liability on that part, therefore, the conditions stipulated in s. 43B are duly fulfilled and thus the assessee was entitled to claim the deduction thereof. We thus answer the question in favour of the assessee and against the Revenue and as a result thereof, this appeal is dismissed. - A. K. SIKRI and SURESH KAIT, JJ. N. P. Sahni, for the Appellant JUDGMENT A.K.Sikri,J.-The following question of law is proposed to be raised in this appeal : 1. Whether the Tribunal was correct in law and on facts in affirming the order of CIT(A) whereby the CIT(A) has deleted the addition of ₹ 7.5 crores added by AO on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the alleged were initiated simultaneously. The issuing authority had passed the order whereby a demand of ₹ 16.91 crores towards excise duty was raised against the assessee. A penalty of ₹ 2 crores was also imposed. 4. Challenging these orders, the assessee had preferred an appeal before the CESTAT. In that appeal, the assessee had also filed an application for stay of the excise demand and levy of penalty. It is in that application the CESTAT passed orders dt. 17th Oct., 2005 directing the assessee to pay a sum of ₹ 7.5 crores as a pre-deposit for stay of the orders passed by the adjudicating authorities and also for hearing of the appeal which was filed before the CESTAT. It is the character of this payment of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination thereof by the sales-tax authorities in as much as under the sales-tax laws, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. In these circumstances, it was held that the assessee would be entitled to seek reduction of such liability which had accrued under the law. Interestingly, in that case, the assessee had not even made any entry in its books of accounts treating the same as liability. Still the Supreme Court has allowed this as deduction on the ground that when the law had entitled the assessee to claim the deduction, merely because it had committed a mistake in not making an entry in the books of accounts, it will not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though it had to be discharged at a future date. In Pope The King Match Factory vs. CIT (1963) 50 ITR 495(Mad), a demand for excise duty was served on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited that amount in his accounts on the last day of his accounting year and claimed that amount as a deductible allowance on the ground that he was keeping his accounts on the mercantile basis. The Madras High Court had no difficulty in holding that the assessee had incurred an enforceable legal liability on and from the date on which he received the Collector's demand for payment and that his endeavour to get out of that liability by preferring appeals could not in any w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the Revenue. The assessee will be entitled to costs in this Court and in the High Court. 7. The principle contained in the aforesaid judgment is reiterated by the Supreme Court in CIT vs. Kalinga Tubes Ltd. (1996) 131 CTR (SC) 98: (1996) 218 ITR 164(SC), CIT vs. Bharat Carbon Ribbon Mfg. Co. (P) Ltd. (1999) 155 CTR (SC) 497: (1999) 239 ITR 505(SC). 8. Once this aspect is clarified, answer to the problem posed before us is no more liable to be sought. No doubt the Tribunal had directed the assessee to make aforesaid payment by way of pre-deposit for stay of the impugned demand and pre-addition for hearing the appeal. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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