TMI Blog2015 (6) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... ystem of accounting, a liability is deductible when it accrues. In the case of the assessee, we noted that the Central Excise Settlement Commission passed the order on 29.02.2008 with corrigendum dated 28.03.2008. Therefore, so far the interest is concerned, the liability accrues when the order was passed by Central Excise Settlement Commission. But the assessee filed a writ petition before the Hon’ble Delhi High Court and the Delhi High Court allowed time to the assessee for making the payment of dues including the central excise as well as interest thereon. The interest no doubt paid during the year but there is no provision under the Income Tax Act para 2 section 43B, which allows the deduction of the interest on payment basis, in case the assessee follows the mercantile system of accounting. The interest, in our opinion, was allowable as deduction only in the assessment year 2008-09 and in case the assessee disapproves the assessee could have argued that the accrual of the liability got postponed and it will accrue only when the High Court passed the order. In our opinion, there cannot be two views possible. So far the deduction of the interest in respect of excise duty is conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessment order and made the addition in respect of excise duty of ₹ 29,17,01,515/-, interest thereon ₹ 12,93,62,086/- and also excise duty of ₹ 3,42,56,200/- by holding as under: 10. Though, the assessee contended from his own angle yet expenses claimed for payment of Excise Duty of ₹ 29,17,01,515/- and Interest ₹ 12,93,62,086/- and also ₹ 3,42,56,200/- is factually incorrect and totally different from the normal Excise Duty which becomes payable regularly as on 31st March of every year and not paid by the end of financial year or within the due date for filing of return due to any reason end also taxed accordingly for the re I event year. Here, the assessee would not have come forward voluntarily to pay the aforesaid amount if no raid (search . seizure) had been carried out by the Central Excise Department in the case of assesse. The demand raised and then paid Excise Duty of ₹ 29,17,01,515/- and Interest ₹ 12,93,62,O86/- thereof (during this year) is only due to falsification of original books of accounts and then filing of an application before both the settlement Commission i.e. Income Tax Settlement Commission, Kolk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.2008 thereby excise liabilities for the assessment years 2001-02 to 2005-06 were determined which consisted excise duty, interest thereon and some penalties. Consequently, Income Tax Settlement Commission passed final order of settlement dated 28.03.2008, which matter by and large follows from the Central Excise Settlement Commission s settlement order. The assessee, in the return for the assessment year 2009-10, filed on 23.09.2009, has shown towards the excise duty and excise deduction. The AO allowed the claim in the assessment order passed under section 143(3). The CIT(A) also noted from the assessment record that there was revenue audit observation raised on the issue for the earlier assessment year 2008-09 that part of the excise duty paid in the previous year relevant to assessment year 2008-09 relied to prior period and therefore, under the mercantile system of accounting, they were not allowable. The AO, therefore, took the recourse to rectify the same in the impugned assessment year. The CIT(A) took the view that the AO indeed and in fact made the reassessment in the guise of rectification and therefore he annulled the impugned rectification order. On merit, he held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment year, the assessee claimed deduction of aforesaid central excise duties of ₹ 29,17,01,515/- and interest of ₹ 12,93,62,086/- as paid. During the impugned assessment year, the assessee did not claim any deduction for the penalty of ₹ 40 crores paid by it. In the assessment order passed under section 143(3), the said payments were allowed as per the provisions of section 43B(a) of the Income Tax Act. Subsequently, after issuing the notice under section 154, the AO, vide order dated 24.05.2013, disallowed the payment in respect of excise duty of ₹ 29.17 crores and interest payment of ₹ 12.93 crores and similar payment of excise duty and interest of ₹ 3.42 crores. The CIT(A) allowed the appeal of the assessee. These payments were made by the assessee in terms of the order passed by the Customs Excise Settlement Commission and the Hon ble High Court. The provisions of section 43B(a) mandates that the deduction in respect of any tax, duty, cess or fee, by whatever name called, under any law shall be allowed (irrespective of previous year, in which liability to pay such sum, was incurred by the assessee according to the method of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability accrues when the order was passed by Central Excise Settlement Commission. But the assessee filed a writ petition before the Hon ble Delhi High Court and the Delhi High Court allowed time to the assessee for making the payment of dues including the central excise as well as interest thereon. The interest no doubt paid during the year but there is no provision under the Income Tax Act para 2 section 43B, which allows the deduction of the interest on payment basis, in case the assessee follows the mercantile system of accounting. The interest, in our opinion, was allowable as deduction only in the assessment year 2008-09 and in case the assessee disapproves the assessee could have argued that the accrual of the liability got postponed and it will accrue only when the High Court passed the order. In our opinion, there cannot be two views possible. So far the deduction of the interest in respect of excise duty is concerned, to that extent, we are of the view that there was a mistake apparent in the order of the AO passed under section 143(3) and therefore, the AO has rightly taken the action under section 154, as non-deductibility of the interest during the impugned assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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