Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (2) TMI 378 - HC - Income TaxWhether additional custom duty is contingent liability - litigation is pending - Held that:- The liability of the assessee to pay the additional customs duty is contingent upon the importers being called upon to pay the same - There is a possibility that the importers may fail before the Supreme Court and the writ petition may be rejected - In such event, the importers may be called upon to pay the disputed amount of tax as a consequence of which the assessee may become liable to pay the same on behalf of the importers - The subject liability is clearly a contingent liability and squarely falls within the definition of the expression contingent liability as defined under the Accounting Standard 29 issued by the Institute of Chartered Accountant of India - Decided against assessee. Whether providing a bank guarantee would amount to payment of a liability u/s 43B - Held that:- Although, the assessee is obliged to pay the additional customs duty as and when the importers are called upon to pay the same, nonetheless, it cannot be considered as a statutory liability because the same is not imposed on the assessee by virtue of any statute - Section 43B applies only in cases of statutory liability - A deduction with respect to a statutory liability is allowed only on payment of the same - Provisions of section 43B are not applicable here. Relying upon the decision in CIT v. Mcdowell and Co. Ltd [2009 (5) TMI 28 - SUPREME COURT] - The requirement of Section 43B of the Act is the actual payment and not deemed payment - As per section 43B - The amount payable must be by way of tax, duty and cess under any law for the time being in force - The bank guarantee is nothing but a guarantee for payment on some happening and that cannot be actual payment which requires that money must flow from the assessee to the public exchequer as required under Section 43B - Decided against assessee.
|