TMI Blog1999 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the customs duty in the assessment year 1983-84 ?" The factual position, as set out in the statement of case, is as follows: The assessee is a company in which the public are substantially interested. It follows the mercantile system of accounting. For the assessment year 1983-84, corresponding to the accounting year ended on December 31, 1982, returns were filed by the assessee on June 30, 1983, in respect of its income from manufacture and sale of electronic components. It claimed deduction of Rs. 47,00,000 being the customs duty payable for the year 1982, consequent on the finding of the customs authorities to load the invoice value. Subsequently, a revised return was filed on August 2, 1985, claiming that a deduction amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue submitted that the demand was not raised during the assessment year in question and in fact, the demand notice was served on October 30, 1980. The order, on the basis of which the claim is made, was passed on March 27, 1982. That was merely an additional demand raised. The Tribunal was not justified in accepting the claim. Learned counsel for the assessee, on the other hand, contended that for the first time such a plea is being raised by the Revenue. Its stand all through has been that there being a dispute to the demand raised, the claim was not allowable. A few dates are necessary to be noted for resolution of the controversy. Originally an order dated October 30, 1980, was passed by the customs authorities. The same was annulled by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise quantification of the liability in the form of an assessment and demand may come later ; (ii) the assessee may contest the liability in appeal or other proceedings ; and (iii) the assessee may have made no provision for the liability in his books. Where the mercantile system of accounting is followed, the assessee is entitled to claim deduction even though the expenditure is not actually incurred and it is enough if the liability for such expenditure accrues. Though the liability could not be enforced till the quantification was effected by assessment proceedings, the liability for payment of tax was independent of the assessment. The principle emanating from various decisions of the apex court is that a provision in the accounts made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [1993] 201 ITR 697. There is no quarrel over this proposition. Such a plea can be entertained if new facts are not considered and on the accepted factual position, the plea can be examined. But even if the Revenue is permitted to take this stand, on the facts, its plea is clearly untenable. Emphasis on the order dated October 30, 1980, is by overlooking the fact that the said demand was nullified in appeal. In fact, the order, on the basis of which the claim is made, is the original order and was passed on March 27, 1982, i.e., within the relevant assessment year 1983-84. The same was not an additional demand as contended by learned counsel for the Revenue. On nullification by the appellate authority, the order dated October 30, 1980 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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