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TMI Blog2010 (11) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... d in which the aforesaid question has cropped up for consideration is as follows : This appeal pertains to the asst. yr. 2006-07 for which the respondent/assessee had filed its return declaring the loss of Rs. 2,12,57,698 while framing the assessment. The AO had noticed that the assessee had claimed deduction in the sum of Rs. 7.5 crores for excise duty. On enquiry, the AO had found that the said amount was deposited by the assessee as pre-deposit in pursuance of the direction of CESTAT. The AO, on that basis, held the view that the amount was not actually as payments towards excise duty and therefore, as per provision of s. 43B of the IT Act, this deduction was not permissible and, therefore, he disallowed the same. The CIT(A) however, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 16.91 crores. As per the adjudicating authority, this amount was the liability of the assessee on account of excise duty (ii) The assessee had challenged the order of the adjudicating authority by filing an appeal before the CESTAT and in those proceedings the stay of the excise demand as well as penalty was prayed for. The order of pre-deposit of Rs. 7.5 crores had a direct nexus and co-relation with the excise demand raised. 6. The first aspect that would arise for the consideration is as to whether the aforesaid order of pre-deposit would have no bearing only because the assessee had challenged the said order by filing the appeal before the CESTAT i.e., the assessee was challenging the payment of the excise duty itself. Such a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment. It is significant that in the present case, the liability had even been quantified and a demand had been created in the sum of Rs. 1,49,776 by means of the notice dt. 21st Nov., 1957 during the pendency of the assessment proceedings before the ITO and before the finalisation of the assessment. It is not possible to comprehend how the liability would cease to be one because the assessee had taken proceedings b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General is that the assessee failed to debit the liability in its books of accounts and, therefore, it was debarred from claiming the same as deduction either under s. 10(1) or under s. 10(2)(xv) of the Act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although under the law. a deduction must be allowed by the ITO, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad made the payment towards excise duty albeit on the direction of the CESTAT as pre-deposit which therefore, would not seize to have the character of excise duty as held in the case of Bharat Carbon & Ribbon Mfg. Co. (P) Ltd. (supra). The ultimate decision in the appeal will have no bearing on the issue. Before us, the admitted position is that the said amount of Rs. 7.5 crores is made against as a part payment against the excise duty demand raised by the excise authorities and since it was a statutory liability on that part, therefore, the conditions stipulated in s. 43B of the IT Act are duly fulfilled and thus the assessee was entitled to claim the deduction thereof. 9. We thus answer the question in favour of the assessee and against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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