TMI Blog1977 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... elling manganese ore. In the relevant assessment year the company was assessed as a non-resident. The company was assessed to provisional duty on the consignments of manganese ore as indicated in the letter dated september 29, 1952, from the Collector of Central Excise, Madras, addressed to the assessee. A relevant extract of the Tribunal (sic). The letter clearly stated that it was proposed to reassess the consignments on the basis of the known cost of the goods of the like kind and quality which could be delivered at the time and place of exportation in the ordinary course of business. In the year 1958 the compan y finally got various demands as under : Date of order received Amount of total additional duty demand Rs. 28-8-1958 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso rejected the contention of the revenue that the claim ought not to be allowed as no such claim was made before the Income-tax Officer. It is from this order of the Tribunal that the above question has been referred to us for our determination. Mr. Joshi, on behalf of the revenue, submitted that the Tribunal was not justified in permitting a deduction because the amount was not paid by the assessee. In fact, the assessee, according to him, disputed the liability to pay this amount. Apart from not making a payment, he did not make an entry even in the books of account for his liability. This being the position, according to his submission, the Tribunal was in error in permitting a deduction of the sum of Rs. 29,33,886 for the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of that amount. The appeals to higher authorities or courts taken by the assessee contesting its liability to pay the sales tax ultimately failed. It was held by the Supreme Court that the moment a dealer made either purchases or sales which were subject to sales tax, the obligation to pay the tax arose. Although that liability could not be enforced till quantification was effected by assessment proceedings, the liability for payment of tax was independent of the assessment. The assessee, which followed the mercantile system of accounting, was entitled to deduct from the profits and gains of its business liability to sales tax which arose on sales made by it during the relevant previous year. The assessee was entitled to the deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting year. That such is the position even in respect of the taxes payable is also clear not only from this decision but also from a decision of the Madras High Court which has been approved by the Supreme Court in the above case. In Pope the King Match Factory v. Commissioner of Income-tax [1963] 50 ITR 495 (Mad), a similar demand for excise duty came to be considered before the Madras High Court. Such a demand was served on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited this amount in his accounts on the last day of his accounting year, and claimed this amount as a deductible allowance in computing his income for the assessment year 1955-56, on the ground that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. If the liability is arising pursuant to a demand made by a department of the Central Government, it would be improper on the part of the taxing authority to reagitate the same matter and contend that since no claim for deduction was made before the Income-tax Officer, it cannot be made later on before either the Appellate Assistant Commissioner or the Tribunal when the matter is under investigation by these authorities in assessment proceedings. Thus, in our opinion, the Tribunal was right in taking the view that the assessee was entitled to a deduction. The question referred to us is accordingly answered in the affirmative and in favour of the assessee. The revenue shall pay the costs of the assessee. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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