TMI Blog2014 (6) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. This cannot be regarded to be the sum actually paid to the State Government for the electricity tariff. The Assessee has disputed the liability and went before the Hon'ble High Court. On the direction of the Hon'ble High Court the amount has been deposited by the Assessee in the designated “no-lien” account with the banker. This, by no stretch of imagination can be regarded to be the discharge of the liability by the Assessee. Actual payment of the amount means that the liability is actually discharged by the Assessee. - Decided against assessee. Claim of deduction in respect of foreign traveling expenditure of the Directors - allowable busniss expenditure - Held that:- AO has disallowed 20% of the expenditure as the Assessee did not file before the AO the tour itinerary of the Directors, details of item-wise expenses incurred by each of the Directors on travel, stay and entertainment etc. Not only this, even though the Assessee has gone before the CIT(A) in respect of the said ground of appeal, but before the CIT(A) the Assessee did not press the said ground of appeal. Before us, even though the Assessee has taken the ground but did not place any cogent material or evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f deduction by the Assessee in respect of ₹ 6,29,11,949/- representing deposit of electricity duty as per the directions of the Hon'ble Odisha High Court. 2.1 The brief facts relating to this ground are that the AO noted that the Assessee had debited expenditure in respect of electricity duty. On examination of the details of the electricity it was noted that the Assessee has not made the payment to the government and the electricity duty demanded by the Government got locked up in dispute between the Assessee and the Government. Eventually, the Assessee had to deposit the said amount in a designated no-lien bank account on the order of the Hon'ble Odisha High Court. The AO disallowed the said amount u/s 43B of the Income Tax Act. When the matter went before CIT(A), CIT(A) confirmed the order of the AO. 2.2 The ld. AR before us vehemently contended that the Assessee was paying electricity duty to the government @ 6 paise/unit but subsequently the Government had increased the rate. The Assessee had to challenge the action of the Government by filing a writ under Article 226 of the Constitution of India being Writ Petition no. 5413 of 2005 challenging the vires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed accounts for the year ended 31.3.2009 (internal pg. 37, 43 46). The AO applied the provisions of Sec. 43B to the differential amount amounting to ₹ 6,29,11,949/- and disallowed the same. The said amount was not disallowable u/s 43B. Referring to the provisions of Sec. 43B it was contended that so far as the Assessee is concerned, the money has out flown from the Assessee and the Assessee was not having any lien in respect of the said amount which was deposited in the no-lien account with State Bank of India. 2.3 The ld. DR on the other hand relied on the order of the CIT(A). 2.4 We have heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below. The undisputed facts in this case are that the Assessee company calculated and paid electricity duty on a provisional basis @ 12 paise/unit. The Odisha Government has been demanding such duty @ 20 paise/unit. The company received a notice dt. 10.12.2004 demanding a sum of ₹ 43.59 crores upto 31.10.2004 towards the electricity duty worked out @ 20 paise/unit inclusive of interest @ 18% p.a. after appropriating provisional payment made by the company towards interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw without the consent of the consumer. Thus, the liability to pay power tariff, in our opinion, is not contractual in nature but is status based. The liability to this accrues, therefore, in the year in which the power has been consumed and this liability in view of the Electricity (Supply) Act, 1948 can be named as statutory liability. The law is well-settled so far it relates to statutory liability. Accrual of the statutory liability arises in the year taxable event occurred even though the liability might have been disputed by the Assessee. The Hon'ble Supreme Court in the case of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT, 82 ITR 363 (SC) has laid down the proposition of law that accrual or arising of liability to pay statutory liability is accrued when the taxable event takes place and that the Assessee who follows mercantile system of accounting is entitled to deduct from the profit and gains of the business such liability as accrued during the period for which the profit and gains were being computed. In this regard, the existence or absence of entries in the books of accounts is not decisive or conclusive of the matter but we noted that there are embargoes put by Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT, 82 ITR 363 (SC) (supra). Therefore, in the case of the Assessee we have to see whether the Assessee is hit by the restrictions put by Sec. 43B. As is apparent from the said provision, the Assessee will be allowed deduction in respect of electricity duty if the said duty has actually been paid by the Assessee during the impugned assessment year or before filing of the income tax return within the due date. It is not the claim of the Assessee that the electricity charges are not duty or cess and therefore provisions of Sec. 43B are not applicable. The contention of the Assessee is that since the Assessee has deposited the amount in the no-lien account as per the directions of the Hon'ble High Court, the depositing of the amount in no-lien account tantamount to actual payment made by the Assessee. We do not agree with the submission of the Assessee. The word used u/s 43B are same as actually paid‟. By depositing the amount in a designated account, it cannot be said that amount has actually been paid by the Assessee to the State Government. Whenever payment is made in respect of a liability, the receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Tokyo, South Korea, Bangkok, Johansburg, South Africa etc. mainly to explore the potential market of ferro alloys consumers in respective countries but the Assessee neither filed the tour itinerary of the Directors nor the item-wise expenses such as expenses on travel, stay, entertainment. Therefore, the AO disallowed 20% of such expenditure. The Assessee went in appeal before the CIT(A). Before CIT(A), the Assessee did not press this ground of appeal. Therefore, the CIT(A) sustained the addition. 3.1 The ld. AR before us drew our attention to pg. 20-21 of the paper book and contended that the Assessee has submitted the details of the expenses incurred on foreign travelling by each of the Directors. Expenditure has been incurred wholly and exclusively for the purpose of business of the Assessee. 3.2 The ld. DR on the other hand relied on the order of CIT(A). He contended that the Assessee has not pressed this ground before the CIT(A). 3.3 We have heard the rival submissions and carefully considered the same. In our opinion, the onus is on the Assessee to prove the genuineness of the expenditure. From the details, a copy of which were filed before us, we noted that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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