9911796707
TMI Blog2002 (11) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (in short "the Act"), against the judgment and order of the Income-tax Appellate Tribunal dated February 11, 1999, in I.T.A.T. No. 6797/D of 1992 whereby the appeal of the Revenue-appellant challenging the order of the Commissioner of Income-tax (Appeals) was dismissed. The short question involved in this appeal is as to whether in view of the provisions contained in section 43B of the Act, the assessee can claim deduction for the sum paid against the customs duty in the previous years. In other words, whether the benefit for the sum paid against the customs duty can be claimed in the subsequent year or the benefit of such deduction can only be allowed in the year in which the actual payment is made. The admitted fact, in brief, is that in the assessment proceeding for the assessment year 1988-89, the Assessing Officer found that the assessee debited a sum of Rs. 3,56,541 in March, 1987, being the customs duty paid in relation to the import of brass scrap weighing 17.433 kg. It was disclosed by the assessee that the aforesaid brass scrap had been shipped from Rotterdam vide bill of lading dated January 7, 1987. The customs house agent of the assessee was Frakcht-For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s actually been not claimed within the prescribed limits. Since in the case in hand the customs duty was paid in the preceding year in respect of consignment of goods which was actually delivered to the assessee on April 22, 1987, relevant to the assessment year in the appeal, the learned Commissioner (Appeals) was of the view that the disallowance of Rs. 3,56,541 does not deserve to be sustained and thus allowed the appeal. The Revenue went in appeal against the aforesaid order of the learned Income-tax Commissioner (Appeals) before the Income-tax Appellate Tribunal, who also vide order dated February 11, 1999, in I.T.A.T. No. 6797/D/92 upheld the order of the learned Commissioner (Appeals) dated July 6, 1992, and dismissed the appeal. It is against these two above orders this appeal has been preferred by the Revenue. Shri A.N. Mahajan, learned standing counsel for the Income-tax Department (appellant), urged that the sum of customs duty paid by the assessee in March, 1987, is deductible only in the year in which it is actually paid, i.e., the assessment year 1987-88, and not in the assessment year 1988-89, and, therefore, both the learned Income-tax Commissioner (Appeals) and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ap and a further sum of Rs. 69,148 was paid in the month of April, 1987, towards additional duty. Section 43B of the Act runs as under: "43B. Certain deductions to be only on actual payment.--Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees, or (c) any sum referred to in clause (ii) of sub-section (1) of section 36, or (d) any sum payable by the assessee as interest on any loan or borrowing from any public financial institution, in accordance with the terms and conditions of the agreement governing such loan or borrowing, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of such sum in computing the income of the previous year in which the sum is actually paid by him. Explanation 4.--For the purposes of this section, the expression 'public financial institution' shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956)". From a close reading of section 43B it is apparent that deduction for any sum payable by the assessee by way of tax or duty under any law for the time being in force, shall irrespective of the previous year in which the liability to pay such sum was incurred, be allowed in computing the income of that previous year in which such sum is actually paid by the assessee. This section was inserted by the Finance Act, 1983, and given effect from April 1, 1984. It was enacted to curb the practice of taxpayers, who on the one hand claim the liability as deduction on the ground that they maintain accounts on mercantile or accrual basis and, on the other hand, they do not discharge the liability and dispute the same. The Supreme Court while considering the provisions contained in section 43B in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677, observed that section 43B was, therefore, clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the deduction should be allowed in the assessment year 1988-89, is contrary to the prescription of law. Section 43B in clear terms provides that the deduction claimed by the assessee in respect of any sum paid by way of tax, duty, cess or fee, shall be allowed only in computing the income referred to in section 28 of that previous year in which it was actually paid, irrespective of the previous year in which the liability was incurred for the payment of such sum as per the method of accounting regularly employed by the assessee. For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction under section 43B of the Act. In this view of the matter, the appeal deserves to be allowed. In the result, the appeal succeeds and is allowed. The impuped order of the learned Income-tax Appellate Tribunal dated February 11, 1999, in I.T.A. No. 6797/D/92 for the assessment year 1988-89, and the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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