9911796707
TMI Blog1999 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the previous year, the assessee claimed that a liability of Rs. 40,66,167 accrued on account of the countervailing customs duty on import of polyamide chips and claimed deduction of that liability. The Income-tax Officer did not allow the liability on the ground that no provision has been made in the accounts. Notice of demand regarding the liability has been received on March 15, 1979, after the year ending. Year ending is September 30, 1978. The liability has also been challenged in the Bombay High Court. The Bombay High Court has allowed the petition of the assessee that no customs duty can be imposed on the import of polyamide chips and the Department filed the appeal before the Supreme Court against the order of the Bombay High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits, though the Bombay High Court has held that the assessee is not liable to pay the customs duty in question but the matter is still pending before the Supreme Court. Therefore, the issue is yet to be settled, whether the assessee is liable to pay the customs duty or not. Therefore, it cannot be said that the liability has ceased and he supported the decision of the Tribunal. The facts are not in dispute that on import of polyamide chips, the customs department has imposed the duty amounting to Rs. 40,66,158. That was challenged and the Bombay High Court held that the assessee is not liable to pay duty on such import. Now the appeal is pending before the Supreme Court. Even notice of demand has been received after the close of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be decisive or conclusive in the matter. The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs. 1,49,776 being the amount of sales tax which it was liable under the law to pay during the relevant accounting year." Therefore, whether the deduction should be allowed or not, that depends on the fact whether the assessee is entitled for a particular deduction, if the deduction is allowable under the provisions of the Act and not on the basis of entry in the books of account. The next issue to be considered is when excise duty liability accrued whether it accrued on receipt of demand notice or when the goods are manufactured ? In CIT v. Century Enka Ltd. [1981] 130 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice. The excise duty liability accrues the moment the assessee manufactures the goods. Notice is a second stage when the liability is quantified and the facts are not in dispute the manufacturing of goods in question was in the accounting year relevant to this assessment year. The next issue is in a case where the assessee disputes the liability when it should be allowed. In cases where the assessee disputes the liability, even the court has decided at some stage the issue in favour of the assessee, but if the matter is pending in appeal thereof it cannot be said that there is a cessation of liability. If the matter is pending in appeal and yet to be settled, the amount cannot be taxed under section 41(1) of the Act. In J. K. Synthet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of India v. J. K. Synthetics Ltd. [1993] 199 ITR 14. Their Lordships held that the liability to tax under section 41 of the Act will depend on the outcome of the appeal before this court (Supreme Court). When the suit is not finally settled that amount cannot be taxed under section 41(1) of the Act. The admitted facts are that the assessee has imported the goods in the accounting year. The matter whether the assessee is liable to pay the customs duty or not, is still pending before the apex court and yet to be decided. Thus the issue has not been finally settled whether the assessee is liable to pay the customs duty in question or not. Therefore, it cannot be said finally that assessee is not liable to pay the customs duty in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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