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2006 (6) TMI 94 - HC - Income TaxDeletion of disallowance made by the Assessing Officer holding that the claim was not relatable to the accounting year since the assessee was following the mercantile system of accounting - HELD THAT:- Since the assessee was following the mercantile system of accounting the assessee should have accounted for the penalty by deducting in the accounting year 1989-90 itself to maintain a claim. The Kerala State Electricity Board had made a deduction towards penalty from bills for delayed supplies and the penalty deduction related to the accounting year 1989-90 relevant to the assessment year 1990-91. The facts would show that the Kerala State Electricity Board had deducted a sum of Rs. 4,24,851 from supply bills for delay in supply during the year 1989-90. Subsequently, the Board refunded a sum of Rs. 2,18,529 to the assessee during the accounting period 1990-91. The liability for the penalty accrued during the accounting period 1989-90 relevant to the assessment year 1990-91. Even if it is true that part of the amount was refunded by the Electricity Board the actual liability relates only to the assessment year 1990-91. The assessee was following the mercantile system of accounting. Hence, the assessee should have claimed the same in the year 1989-90. The contention that the assessee was trying their best to get the penalty waived by the Kerala State Electricity Board and only after exhausting all steps the assessee could claim deduction cannot be sustained. Mere protest or opposition by a subject to the levy of tax or other duties payable to the Government cannot carry with it the implication that there is no proper levy legally recoverable till such protest or opposition ceases or is silenced. So long as the assessee is following the mercantile system of accounting, in our view, the assessee should have claimed deduction in the year 1989-90 accounting year. Therefore, the Tribunal was not justified in interfering with the order passed by the appellate authority.
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