2010 (3) TMI 863 - HC - Income Tax

Whether customs and excise duty debited to the profit and loss account was not an allowable deduction as the assessee had not established by adducing evidence that such payment had been made or before the due date as prescribed under section 139(1) of the Act - assessee claimed deduction in respect of the customs and excise duty paid by virtue of section 43B of the Income-tax Act - Assessing Officer by his order had stated that the actual payment had not been established and therefore was disallowed under section 43B of the Act Held that - appeal is allowed and the matter is remanded back to the Assessing Officer

Summary

Issues:
- Challenge to order regarding deduction of customs and excise duty under section 43B of the Income-tax Act.
- Entitlement of the respondent-assessee to benefit under section 43B.
- Double deduction claimed by the assessee.
- Appeal against order of Commissioner of Income-tax (Appeals).
- Challenge to Tribunal's decision granting relief under section 43B.
- Necessity of actual payment of customs and excise duty before the due date for benefit under section 43B.

Analysis:

1. The appeal was filed by the Revenue challenging an order passed regarding the deduction of customs and excise duty under section 43B of the Income-tax Act. The substantial questions of law raised were related to the establishment of actual payment of a specific amount and the applicability of section 139(1) of the Act. The main issue was whether the respondent-assessee was entitled to the benefit of section 43B due to the actual payment of excise duty before the due date.

2. The respondent-assessee had claimed a deduction for customs and excise duty paid under section 43B. The Assessing Officer disallowed a specific amount as the actual payment was not proven. The Commissioner of Income-tax (Appeals) also rejected the claim citing the amount had already been allowed. The Income-tax Appellate Tribunal, however, granted relief under section 43B, leading to the appeal by the Revenue.

3. During arguments, the senior counsel highlighted the Department's notes stating the Assessing Officer's disallowance due to lack of evidence for actual payment. The counsel argued for a remand to the Assessing Officer for further consideration based on the necessity of establishing actual payment before the due date to claim benefits under section 43B, referencing the case of Berger Paints India Ltd. v. CIT [2004] 266 ITR 99 (SC).

4. The High Court, without addressing the substantial questions of law directly, allowed the appeal and remanded the matter to the Assessing Officer. The decision was based on the need for the respondent-assessee to prove the actual payment of excise and customs duty before the due date to be eligible for benefits under section 43B of the Act. The court emphasized the importance of providing necessary evidence to support the claim.

5. In conclusion, the judgment focused on the requirement of actual payment of customs and excise duty before the due date for claiming benefits under section 43B. The court's decision to remand the matter back to the Assessing Officer highlighted the significance of establishing proof to support the deduction claims, as per the provisions of the Income-tax Act.