CIT and Another vs Digital Globalsoft Ltd.

Mrs. B.V. Nagarathna, J.—The Revenue has preferred this appeal by challenging the order dated 20-6-2005, passed in I.T.A. No. 1689/ Bang/2002 on the following substantial questions of law:

(i) Whether the Tribunal should have examined the controversy raised by the Assessing Officer that on amount of Rs. 7,52,34,374, a sum of Rs. 5,29,47,942 customs and excise duty debited to the profit and loss account was not an allowable deduction as the assessee had not established by adducing evidence that such payment had been made or before the due date as prescribed u/s 139(1) of the Act ?

(ii) Whether the Tribunal was correct in holding that excise duty and customs duty is claimed separately and in view of the applicability of section 43B of the Act the opening stock will stand reduced and corresponding addition to its income has to be made on mere conjectures and surmises and consequently recorded a perverse finding?

We have heard the learned counsel for the Revenue and the learned senior counsel for the respondent-assessee. The question for consideration is whether the respondent-assessee is entitled to the benefit of section 43B of the income tax Act, in view of there being actual payment of excise duty before the due date.

In the instant case, the respondent-assessee claimed deduction in respect of the customs and excise duty paid by virtue of section 43B of the income tax Act. The Assessing Officer by his order had stated that the actual payment had not been established and, therefore, a sum of Rs. 5,29,47,942 was disallowed u/s 43B of the Act. The Commissioner of income tax (Appeals) was also of the opinion that since the assessee had debited the said amount in the profit and loss account during the year and the same had been allowed by the assessing officer, a further claim u/s 43B in the statement of income would amount to a double deduction claimed by the assessee. Being aggrieved by the said order of the Commissioner of income tax (Appeals), the assessee preferred an appeal before the income tax Appellate Tribunal. The Tribunal allowed the appeal and has granted the relief u/s 43B of the Act. The said order is challenged in this appeal.

During the course of arguments, learned senior counsel for the respondent-assessee has brought to our notice the notes of the Department with regard to the contention of the assessee that there was actual payment of customs and excise duty so as to seek the benefit u/s 43B of the Act. In the said notes, it is categorically stated that while computing the total income the assessing officer had disallowed a sum of Rs. 5,29,47,942 u/s 43B(a) of the Act on the ground that the assessee-company had not established the actual payment of customs and excise duty with necessary evidence of such payment on or before the due date. In view of the said statement made in the notes of the Assistant Commissioner of income tax (Assessing Officer), the contention of the learned senior counsel is that the decision in Berger Paints India Ltd. Vs. Commissioner of Income Tax, Calcutta, cannot be made applicable straight-away. In the circumstances, it is just and proper to remand the matter back to the assessing officer to consider the entire issue by giving an opportunity to the respondent-assessee to produce the necessary evidence to establish that there had been an actual payment of customs and excise duty before the due date so as to be entitled to the benefit u/s 43B of the Act. Under the circumstances, without answering the substantial questions of law, the appeal is allowed and the matter is remanded back to the Assessing Officer to decide the issue to consider the question u/s 43B of the Act and pass orders in accordance with law depending upon the proof of the fact that the respondent-assessee has paid excise and customs duty before the due date.