TMI Blog2019 (10) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chatturam v. CIT [ 1947 (4) TMI 8 - FEDERAL COURT] that liability to tax does not depend on assessment; that ex hypothesis has already been fixed : the assessment order only quantifies the liability which is already definitely and finally created by the charging sections [Ishwarlal Parekh v. State of Maharashtra [ 1968 (5) TMI 1 - SUPREME COURT] Therefore the fact that in the absence of an assessment order or absences of entries in the books of accounts is no bar to claim as deduction of excise duty of tax. The excise duty is attracted the movement the activity of manufacturing is complete. Therefore crystallization of liability is established in the year of manufacturing. Admittedly, during the year under consideration, the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in any case violative of the principles of equity and natural justice. Deduction u/s 43B of the Act 2. The Learned Commissioner of Income tax (Appeals) has erred in reducing the amount of ₹ 69,89,240/-received as security deposit from a customer from the deduction eligible u/s 43B of the Income Tax Act, 1961 for the excise duty paid under protest. 3. The Learned Commissioner of Income tax (Appeals) has erred in denying the benefit of deduction for the reason that any amount received from the customer against the excise duty paid under protest will have to be set off against the deduction eligible u/s 43B. 4. The Learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yurvedic drugs. The return of income for the AY 2012-13 was filed on 28.09.2012 disclosing total loss of ₹ 42,41,829/- under normal provisions of the Income Tax Act, 1961 (in short the Act ) and book profits of I1,22,56,032/- under the provisions of Section 115JB of the Act. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Circle-1, Pondicherry. (hereinafter called AO ) vide order dated 30.01.2015 passed u/s. 143(3) of the Act after making disallowance of ₹ 1,67,62,544/- under the provisions of Section 43B of the Act on the ground that liability of excise duty has not been crystallized. The reasons given by the Assessing Officer for the above disallowance are two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related to this amount of Rs.l,17,00,000/-. Therefore, I order that the amount of ₹ 75,78,328/- should be added and be set off against the disputed excise duty of ₹ 1,67,62,546/- as determined and allowed u/s 37 r.w.s 43B of the Act as per paragraph 6.21 and only the net amount of ₹ 9l,84,218/- shall be eligible for deduction in its computation of taxable income. 6.26 Even on this amount of ₹ 91,42,218/-, if the assess e has received any amount which is related to disputed excise duty from its customers/distributors then, only the net of the amount after set off shall be eligible for deduction either u/s 37 or u/s 43B of the Act, a the case may be. It is also held that amount of ₹ 69,89,240/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 7. We heard the rival submissions and perused the material on record. The settled legal position of law is that liability to pay tax arises by virtue of the charging section alone though quantification of the amount payable is postponed, as held by the Supreme Court in the case of Kesoram Industries amp; Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 and then again in the case of Setu Parvati Bayi v. CWT [1968] 69 ITR 864 . Similar was the view of the Federal Court in the case of Chatturam v. CIT [1947] 15 ITR 302, which relied upon the decision of the House of Lords in Whitney v. IRC [1925] 10 TC 88 (HL), that liability to tax does not depend on assessment; that ex hypothesis has already been fixed : the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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