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TMI Blog2014 (2) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... a deduction while computing the business profits for the earlier assessment years, as per the provisions of the law existing for the said earlier assessment years, cannot be a ground for allowing as a deduction out of the profit of the relevant assessment year 1984-1985 by taking shelter of Section 43B. As per opinion, Section 43B puts a further rider for allowing any deduction and cannot be taken as a gateway for allowing deductions in respect of the expenditure for which the liability arose in the earlier years but the same was not provided in the books of accounts or claimed in the computation of income in those earlier years in which Section 43B was not in existence. Earlier provisions of Section 4 of the Income Tax Act, 1961, income ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the aid of section 43B the position would not have been much different. He drew our attention to a Division Bench judgment of this Court in the case of CIT vs. Orient Supply Syndicate, reported in 134 ITR 12 wherein the Division Bench opined as follows: "In that view of the matter, we are of the opinion that the Tribunal was correct in allowing this deduction. We would, however, say that it is not in all cases correct to say that a statutory liability discharged in a particular year become eligible for deduction in the year in question in the mercantile system of accounting. It depends on the facts and circumstances of the case and on the statutory provisions. Here in part the statutory liability admittedly accrued in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounting regularly employed by the assessee is not the mercantile system of accounting. If it is the mercantile system of accounting which is to be followed, the liability to pay Rs.31,675 should have been claimed as a liability for the assessment year 1953-54. The liability of a past year cannot be taken into account for computing the income of a subsequent year. Nor can the income of a year other than the relevant year, whether that income accrued before or after the relevant year, be taken into account for computing the income for the relevant year. This is the principle of the decision of the Madras High Court in Pope The King Match Factory v. Commissioner of Income tax, 1963 50 ITR 495. This decision has been specifically approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took the view that the question whether the liability of the earlier years discharged subsequently can be allowed to be deducted is a question which would depend on the facts and circumstances of the case and the statutory provisions. Our attention was not drawn to any statutory provisions on the basis of which the appellant before us incurred the liability to pay the excise duty in question or in violation whereof the appellant refused to pay. On the contrary, it appears that the claim was made on the basis of a valuation which the assessee disputed and that is how the matter went to the adjudicatory authority. It is in those circumstances that the payment was made after adjudication and not during the relevant year. We are of the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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